Administration Of Bankruptcy Law In Singapore (1)

Causes of Bankruptcy may be broken down as follow

CAUSES OF BANKRUPTCYBusiness Failure 31Unemployment Low Income 26Overspending Speculation Gambling 19Liability as Guarantor 12Others 12

BANKRUPTCY INFORMATION PROVIDED BY THE OFFICIAL ASSIGNEE TO THE PUBLIC- 1048729 Internet Insolvency Search Service- 1048729bankruptcy search via internet at httpwwwminlawgovsgipto at $600(+4 gst) per search

Breakdown of the causes of Insolvency of non-business related bankrupts

Excessive use of credit facilities (eg credit cards overdrafts etc) 70Liability as guarantor (egg vehicle loans renovation loans study loans etc)

85

Speculation gambling 6Ill Health 26Inability to collect debts 24Criminal breach of trust 05Cause of insolvency not disclosed 10

5 OBJECTIVES OF BANKRUPTCY ACT

Obj 1 ndash reduce instances where parties resort to bankruptcy proceedings

a) see bankruptcy threshold below

b) see juris of court below

c) Pre-Bankruptcy Regime ndash Voluntary arrangements- see chart pg 103- Part V of the BA provides debtors with an avenue to explore debt settlement with their creditors so as to

avoid bankruptcy proceedings This is achieved by entering into a voluntary arrangement with creditors The scheme allows an individual debtor or a firm (if supported by all or a majority of the partners) to make a proposal for a composition or scheme of arrangement to satisfy their respective claims

- Voluntary arrangements are not applicable to undisclosed bankrupts- Voluntary arrangements are most useful where a debtor has substantial assets and liabilities

Interim Order s45-48- Upon an application by the debtor by way of OS the Court may grant an interim order if it is satisfied that -

s45(1) No partner in an insolvent firm shall apply to the court for an interim order in respect of the

firm unless all or a majority of the partners in the firm join or intend to join in the making of the proposal for a voluntary arrangement ndash s45(2)

Interim order of court45 mdash(1) Subject to subsection (2) any insolvent debtor who intends to make a proposal to his creditors for a composition in satisfaction of his debts or a scheme of arrangement of his affairs (referred to hereinafter as a voluntary arrangement) may apply to the court for an interim order under this Part (2) No partner in an insolvent firm shall apply to the court for an interim order in respect of the firm unless all or a majority of the partners in the firm join or intend to join in the making of the proposal for a voluntary arrangement (3) An interim order shall have the effect that during the period for which it is in force mdash

(a) where the interim order is in respect of an individual debtor mdash (i) no bankruptcy application may be made or proceeded with against the debtor and (ii) no other proceedings execution or other legal process may be commenced or continued against the person or property of the debtor without the leave of the court and (b) where the interim order is in respect of a firm mdash (i) no bankruptcy application may be made or proceeded with against the firm or except with the leave of the court any partner therein and (ii) no other proceedings execution or other legal process may be commenced or continued against the firm or its property or against the person or property of any partner in the firm without the leave of the court (4) An interim order shall cease to have effect 42 days after the making thereof unless the court otherwise directs

The debtor intends to make a proposal for a VA ndash s48(1)(a)

Conditions for making of interim order48 mdash(1) The court shall not make an interim order on an application under section 45 unless it is satisfied that mdash (a) the debtor intends to make a proposal for a voluntary arrangement (b) no previous application for an interim order has been made by or in respect of the debtor during the period of 12 months immediately preceding the date of the application and (c) the nominee appointed by the debtorrsquos proposal is qualified and willing to act in relation to the proposal (2) The court may make an interim order if it thinks that it would be appropriate to do so for the purpose of facilitating the consideration and implementation of the debtorrsquos proposal

The nominee appointed by the debtor to supervise the VA is qualified and willing to act and ndash s48(1)(c) It would be appropriate to do so to facilitate the consideration and implementation of the debtorrsquos proposal ndash s48(2)

- This interim orders acts as a stay of all bankruptcy petitions executions and all legal proceedings against the debtor ndash s45(3)(a) or the firm ndash s45(3)(b)

- The Order is valid for only 42 days unless it is extended ndash s45(4)

Nominee ndash s46- The nominee must be either an Advocate and Solicitor a public Ccountant or such other person as the

Minister may prescribe

Nominee46 mdash(1) Every debtor making a proposal for the purpose of this Part shall in such proposal appoint a nominee to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementation (2) No person shall be appointed as a nominee unless he is mdash (a) registered as a public accountant under the Accountants Act (Cap 2A) (b) an advocate and solicitor or (c) such other person as the Minister may by order published in the Gazette prescribe (3) The Minister may make rules prescribing the scale of fees to be charged by nominees assisting debtors in respect of voluntary arrangements

Debtorrsquos debt settlement proposals ndash s49- Debtor is required to submit to the nominee the terms of the VA he is proposing and a statement of his

assets liabilities and affairs

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash

(a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

Nomineersquos report and Creditorsrsquo Meeting ndash s49-54- Nominee will report to the Court as to whether a creditorsrsquo meeting should be convened to consider the

debtorrsquos proposals ndash s49(1)(a)- If in his opinion such a meeting should be summoned the date on which and the time and place at which

he proposes the meeting should be held ndash s49(1)(b)- If Court is satisfied that such a meeting should be convened it will extend the validity of the interim order ndash

s49(5)

Summoning of creditorsrsquo meeting50 mdash(1) Where a nominee has reported to the court under section 49 that a meeting of the debtorrsquos creditors should be summoned the nominee shall unless the court otherwise directs summon that meeting in accordance with his report (2) The nominee shall summon to the meeting every of the debtorrsquos creditors of whose claim and address he is aware

Consideration and implementation of debtorrsquos proposalDecision of creditorsrsquo meeting51 mdash(1) A creditorsrsquo meeting summoned under section 50 may if the meeting thinks fit by special resolution resolve to approve the proposed voluntary arrangement whether with or without modification (2) The meeting shall not approve the proposed voluntary arrangement with any modification unless the debtor has consented to such modification (3) For the purpose of this section a modification subject to which a proposed voluntary arrangement may be approved by a creditorsrsquo meeting may confer the functions proposed to be conferred on the nominee on another person qualified to act as a nominee (4) No modification under subsection (3) shall alter the proposal to such an extent that it ceases to be a proposal for a voluntary arrangement by the debtor (5) The meeting shall not approve any proposal or any modification thereto which affects the right of a secured creditor of the debtor to enforce his security except with the concurrence of the secured creditor concerned (6) The meeting shall not without the concurrence of the preferential creditor concerned approve any proposal or any modification thereto under which mdash (a) any debt of the debtor not being a preferential debt is to be paid in priority to any preferential debt of the debtor or (b) any preferential debt of the debtor is to be paid in relation to any other preferential debt of the debtor other than in accordance with section 90 (7) Every meeting shall be conducted in accordance with the prescribed rules

(8) Any debtor who makes any false representation or commits any other fraud for the purpose of obtaining the approval of his creditors to a proposal for a voluntary arrangement shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both Report of decisions to court52 mdash(1) After the conclusion of the creditorsrsquo meeting summoned under section 50 the nominee shall report the result thereof to the court and shall serve a copy of the report on such persons as may be prescribed (2) Where the meeting has declined to approve the debtorrsquos proposal the court may discharge any interim order which is in force in relation to the debtor Effect of approval53 mdash(1) Where the creditorsrsquo meeting summoned under section 50 has approved the proposed voluntary arrangement whether with or without modifications the approved arrangement shall mdash (a) take effect as if made by the debtor at the meeting and (b) bind every person who had notice of and was entitled to vote at the meeting whether or not he was present or represented thereat as if he were a party to the arrangement (2) Subject to section 54 the interim order in force in relation to the debtor shall cease to have effect at the end of 28 days from the date the report was made to the court under section 52 (3) Where proceedings on a bankruptcy application have been stayed by an interim order which ceases to have effect under subsection (2) that application shall unless the court otherwise orders be deemed to have been dismissed Review of meetingrsquos decision54 mdash(1) Any debtor nominee or person entitled to vote at a creditorsrsquo meeting summoned under section 50 may apply to the court for a review of the decision of the meeting on the ground that mdash (a) the voluntary arrangement approved by the meeting unfairly prejudices the interests of the debtor or any of the debtorrsquos creditors or (b) there has been some material irregularity at or in relation to the meeting (2) Upon hearing an application under subsection (1) the court may if it thinks fit do one or both of the following (a) revoke or suspend any approval given by the meeting (b) direct any person to summon a further meeting of the debtorrsquos creditors to consider any revised proposal the debtor may make or in a case falling within subsection (1) (b) to reconsider the original proposal of the debtor (3) No application under this section shall be made after 28 days from the date the report was made to the court under section 52 (4) Where at any time after giving a direction under subsection (2) (b) for the summoning of a meeting to consider a revised proposal the court is satisfied that the debtor does not intend to submit such a proposal the court shall revoke the direction and revoke or suspend any approval given at the previous meeting (5) Upon giving a direction under subsection (2) (b) the court may if it thinks just extend the validity of any interim order in relation to the debtor for such period as it may think fit (6) Upon giving a direction or revoking or suspending an approval under this section the court may give such supplemental directions as it may think fit and in particular directions with respect to mdash (a) things done since the meeting under any voluntary arrangement approved by the meeting and (b) such things done since the meeting as could not have been done if an interim order had been in force in relation to the debtor when they were done (7) Except in pursuance of this section no approval given at a creditorsrsquo meeting summoned under section 50 shall be invalidated by reason only of any irregularity at or in relation to the meeting Implementation and supervision of approved voluntary arrangement55 mdash(1) Where a voluntary arrangement approved by a creditorsrsquo meeting summoned under section 50 has taken effect the nominee shall supervise the implementation of the voluntary arrangement (2) If the debtor or any of his creditors is dissatisfied by any act omission or decision of the nominee in his supervision of the implementation of the voluntary arrangement the debtor or creditor may apply to the court to review that act omission or decision (3) On hearing an application under subsection (2) the court may mdash (a) confirm reverse or modify any act or decision of the nominee or (b) give such directions to the nominee or make such order as it thinks fit (4) The nominee may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement (5) The court may whenever mdash (a) it is expedient to appoint a person to carry out the functions of the nominee and

(b) it is inexpedient difficult or impracticable for such an appointment to be made without the assistance of the court make an order appointing a person who is qualified to act as a nominee either in substitution for the existing nominee or to fill a vacancy

- After the creditorsrsquo meeting the nominee will report to the Court as to whether the debtorrsquos proposal has been approved by the creditors ndash s52(1)

- If the proposal is approved by the creditors the nominee will proceed to implement it ndash s53(1)(a) The creditors as well as the nominee may bring bankruptcy proceedings against the debtor if he subsequently fails to comply with the terms for a proposal which has been approved by the creditors IF the proposal is successfully implemented y the nominee the debtor will have effectively avoided bankruptcy

- If proposal is not approved the interim order will be discharged and the creditors will be at liberty to proceed against the debtor ndash s52(2)

ROLE OF THE OFFICIAL ASSIGNEE- Administration of individual insolvencies as trustee in bankruptcy and to balance the interests of creditors

bankrupt and the public- Assist creditors in recovering debts- Assist bankrupts to obtain discharge from bankruptcy

S125 Bankruptcy Act ndash Through a certificate of discharge or Application for discharge Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

- And Assist the community in dealing with the impact of individual and corporate financial failure ldquoCorporate financial failurerdquo refers to insolvent winding up of companies Interest of banker and creditor may be quite different Creditor wants money back Bankrupts want to avoid paying their debts ndash clash of interests

- Perform bankruptcy administration- bull Determine ownership recovery and realisation of bankruptsrsquo assets for distribution to creditors

Includes attending court to represent the bankruptrsquos estate in interpleaders

- bull Administer bankruptsrsquo outstanding legal suits and affairs Bankruptrsquos statement of affairs ndash deals with his assets and liabilities etc in many cases lawsuits wld have started before bankruptcy and stil in middle of lawsuit

when bankruptcy occurs so there will be goodie in dissolving lawsuits

- bull Prosecute errant bankrupts who breach their duties and obligations under the Bankruptcy Act This would entail investigations into the affairs and even to examine the complainant or

3rd parties to the financial transactions or even apply to issue warrants of arrest- bull Adjudicate creditorsrsquo claims by determining liability and amount- bull Mediate between bankrupts amp creditors to achieve debt settlement- bull Attend High Court hearings for purpose of discharging bankrupts from bankruptcy

hearings held in supreme court registry (on Thursdays at 9am)- bull Assist the Court as amicus curiae in matters concerning bankruptcy law and procedure

neutral party ndash official assignee court requires them to turn up and assist where the Court requires interpretation of the Bankruptcy Act and Rules by an

independent 3rd party the OA will be called in Eg where the bankrupt appeals against a bankruptcy holding by the Assistant Registrar

- bull Review and amend legislation policies and procedures official assignee department has cycle of review for obsolete procedures and see whether

new changes can be put into fact- bull Decide whether to sanction any action that the bankrupt wishes to commence or proceed with

upon analysing the merits of the case and the costs involved (see s131(1)(a) s165(5) of the Act)

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

impt when official assignee finds out wil put stop to ensure that the assets of the bankrupt are not dissipated towards unfruitful

ventures difficult to lawyer ndash

lawsuit stops in its tracks ndash official assigne wants security in terms of costs upfront and may amt to quite a lot s party suing (already bankrupt) will need to find third party to provide security in osts if not provided then lawsuit may be dismissed

and imptly whoeve lawyer representing feels tt not represented properly ndash may comploain tt lawyer neg in advising him

=gt so if client bankruptproceeding against bankrupt ndash must have relevant security ready

bull Attend Court at hearings of appeals or applications by bankrupt and third parties against any decision or act of the Official Assignee (see s31 of the Act)

whether to admit or refuse decisions can be appealed against OA asked to appear in court to defend decision Judge in HC will adjudicate

Review by court of Official Assigneersquos act omission or decision31 mdash(1) If a bankrupt or any of his creditors or any other person is dissatisfied by any act omission or decision of the Official Assignee in relation to the Official Assigneersquos administration of the bankruptrsquos estate he may apply to the court to review such act omission or decision (2) On hearing an application under subsection (1) the court may mdash (a) confirm reverse or modify any act or decision of the Official Assignee or (b) give such directions to the Official Assignee or make such other order as it may think fit (3) The Official Assignee may apply to the court for directions in relation to any particular matter arising under the bankruptcy

PETITION FOR BANKRUPTCY- 1048729 There are 2 types of bankruptcy petitions

Creditorrsquos petition (Section 57) ndash more common Debtorrsquos petition (Section 58) ndash self petition usu ccurs when person cannot stand it anymore

and wnts bankruoptcy prxtn and so applies for this Once petition successful -gt

Persons who may make creditorrsquos bankruptcy application57 mdash(1) Subject to this Part a creditorrsquos bankruptcy application may be made mdash (a) against an individual by mdash (i) one of the individualrsquos creditors or jointly by more than one of them or (ii) the nominee supervising the implementation of or any person (other than the individual) who is for the time being bound by a voluntary arrangement proposed by the individual and approved under Part V or (b) against a firm by mdash (i) one of the firmrsquos creditors or jointly by more than one of them if such creditor or creditors are entitled under paragraph (a) (i) to make a creditorrsquos petition against any one of the partners in the firm in respect of a partnership debt or (ii) the nominee supervising the implementation of or any person (other than the partners in the firm) who is for the time being bound by a voluntary arrangement proposed by the firm and approved under Part V (2) A creditor who is entitled to make a bankruptcy application against a firm under subsection (1) (b) may make a bankruptcy application against any of the partners in the firm without including the others (3) Every creditorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit of the creditor or of some person on his behalf having knowledge of the facts (4) Every creditorrsquos bankruptcy application shall be served in the manner prescribed

Persons who may make debtorrsquos bankruptcy application58 mdash(1) Subject to this Part a debtorrsquos bankruptcy application may be made mdash (a) against an individual debtor by the debtor himself or (b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the making of the application (2) A debtorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit to which is exhibited mdash (a) where the debtor is an individual a statement of his affairs containing such particulars of his assets creditors debts and other liabilities as may be prescribed (b) where the debtor is a firm a statement of mdash (i) the firmrsquos affairs containing such particulars of its assets creditors debts and other liabilities as may be prescribed and (ii) the affairs of each of the partners in the firm by whom the application is made containing such particulars of his assets creditors debts and other liabilities as may be prescribed and (c) a statement containing such other information as may be prescribed

Prima facie rule of OA as trustee may be varied - When a debtor is made a bankrupt by the Court the Official Assignee will administer his affairs in

bankruptcy unless the petitioner requests that a private trustee be appointed in place of the Official Assignee (Section 33)

o (latter rare usu occurs when debtor has a lot of overseas assets so want private trustee But this is very expensive

Appointment of person other than Official Assignee as trustee in bankruptcy33 mdash(1) The court may mdash (a) on making a bankruptcy order and (b) on the application of the creditor who applied for the bankruptcy order appoint a person other than the Official Assignee to be the trustee of the bankruptrsquos estate (2) The official name of the trustee shall be mdash (a) ldquothe Trustee of the estate of (name of bankrupt) a Bankruptrdquo or (b) ldquothe Trustee in Bankruptcy of (name of bankrupt) a Bankruptrdquo

Qualifications of a Trustee in Bankruptcy - s34- 1048729 A private trustee can be either a certified Public Accountant or a Solicitor or any person as prescribed by

the Minister (Section 34)- In addition must not be a person who has been convicted for a crime of dishonesty punishable with

imprisonment of more than 3 months [s34 - BA] - Petitioning creditors must obtin consent of person to be appted as trustee- S35 ndash private trustee reqd to furnish security to satisfaction of fofical assignee before commencing to act

failure to comply is offence punishable on conviction by fine not exceeding 10000

Qualifications for appointment as trustee34 No person shall be appointed as a trustee in bankruptcy unless he satisfies the court that mdash (a) he is mdash (i) registered as a public accountant under the Accountants Act (Cap 2A) (ii) an advocate and solicitor or (iii) such person as the Minister may by order published in the Gazette prescribe and (b) he has not been convicted of an offence involving fraud or dishonesty punishable on conviction by imprisonment for 3 months or more and he has consented in writing to being appointed as a trustee

- S361 ndash private trustee to have fn and duties and ex powers of official assignee- Powers include

Delegation of powers and fn by official trustee s19 Power to administer oaths s24 Power to seize bankruptrsquos assets s108 Power to appt special manager s113 Power to impound bankruptsrsquo passports s116 Discharge of bankrupt[ buy certi of officval assignee s125 Power to annul bankruptcy order by cert of annulment where creditor has approved debt settm

proposal by special resoln s95A Powwr to annul bankruptcy order by cert of annulment when bankrupt has paid debts of

creditors in full s123A Use of insolvency assistance fund s165

General functions duties and powers of trustee36 mdash(1) Subject to subsection (3) and section 39 a trustee shall mdash (a) have all the functions and duties of the Official Assignee in relation to the conduct of a bankrupt and the administration of his estate as provided in this Act and (b) exercise all the powers of the Official Assignee (2) Any reference in this Act or the rules to the Official Assignee shall unless the context otherwise requires include a reference to a trustee (3) Sections 19 24 95A 108 113 116 123A 125 and 165 shall not apply to a trustee and section 112 (a) (c) (f) (h) and (i) shall not apply to a trustee except with the consent of the court the creditorsrsquo committee or if there is no creditorsrsquo committee the Official Assignee

- Powers of official assignee which x apply to private trustee except with consent of court creditorsrsquo committee or official assignee or official assignee (where no creditorsrsquo committee) ndash

o S112a ndash carrying on business of bankrupto S112c ndash employing advocate and solicitor for legal proceedings or business purpose o S112f ndash referring of disputes to arbitration or compromising of debtso S112h ndash compromising of claims in relation to bankruptrsquos propertyo S112i ndash dividing property amongst creditors in existing form without first realizing it

- Section 38 ndash scheme for determination of trusteersquos remuneration- S39 ndash subj private trustee to control of official assignee who may apply to court for removal of trustee based

on investigation made under section

General powers of Official Assignee112 The Official Assignee may exercise any of the following powers (a) carry on any business of the bankrupt so far as is necessary for winding it up beneficially (b) bring institute or defend any action or legal proceedings relating to the property of the bankrupt (c) employ an advocate and solicitor to take any proceedings or do any business (d) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security or otherwise as he thinks fit (e) mortgage or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts (f) refer any dispute to arbitration or compromise all debts claims and liabilities whether present or future certain or contingent liquidated or unliquidated subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt on the receipt of such sums payable at such times and generally on such terms as are agreed on (g) make such compromise or other arrangement as is thought expedient with creditors or persons claiming to be creditors in respect of any debts provable under the bankruptcy (h) make such compromise or other arrangement as is thought expedient with respect to any claim arising out of or incidental to the property of the bankrupt made or capable of being made on the Official Assignee by any person or by the Official Assignee on any person and (i) divide in its existing form amongst the creditors according to its estimated value any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold Remuneration of trustee38 mdash(1) A trustee shall be entitled to receive such salary or remuneration as is determined in the following manner (a) by agreement between the trustee and the creditorsrsquo committee if any (b) failing any agreement with the creditorsrsquo committee or where there is no such committee by a special resolution of the creditors whose debts have been admitted for the purpose of voting and who are present in person or by proxy and voting at a meeting to be convened by the trustee by a notice to each creditor in accordance with subsection (2) or (c) failing a determination in the manner referred to in paragraph (a) or (b) by the court (2) The trustee shall attach to every notice under subsection (1) (b) a statement of all receipts and expenditure by the trustee and the amount of remuneration sought by him Control of trustee by Official Assignee39 mdash(1) The Official Assignee shall take cognizance of the conduct of a trustee in the administration of the estate of a bankrupt (2) If the trustee does not faithfully perform his duties or duly observe all the requirements imposed on him by this Act the rules or any other written law with respect to the performance of his duties or if any complaint is made to the Official Assignee by any creditor or bankrupt in regard thereto the Official Assignee shall inquire into the matter and take such action thereon as he may think expedient (3) The Official Assignee may mdash (a) at any time require a trustee to answer any inquiry in relation to his administration of the estate of a bankrupt and (b) also direct an investigation to be made of the books and vouchers of the trustee (4) It shall be the duty of the trustee mdash (a) to furnish the Official Assignee with such information (b) to produce to the Official Assignee and permit inspection by the Official Assignee of such books papers and other records and

(c) to give the Official Assignee such other assistance as the Official Assignee may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy (5) The Official Assignee may having regard to the results of any inquiry or investigation made under this section apply to the court for the removal of the trustee

Jurisdiction of the Court to hear bankruptcy petitionPursuant to s3 of the Bankruptcy Act a bankruptcy petition will be heard by the HC- first by the Registrar- then on appeal to a judge in chambers- this is necessitated because of the drastic change repercussion of granting of bankruptcy order

High Court to be the court having jurisdiction in bankruptcy3 Subject to any other written law the High Court shall be the court having jurisdiction in bankruptcy under this Act

WHO MAY PRESENT BANKRUPTCY PETITION- Section 57 Bankruptcy Act - Persons who may present creditorrsquos petition (includes joint petition by 2 or

more creditors) Costs involved in presenting this Stimes diff to recover 2 or more creditors may decide to put jt petition therefore less common more common ndash one creditor (main )doing all the work and other creditors turning up to give

moral support (not monetary)

- Section 58 Bankruptcy Act - Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors etc must also be filed together with the petition)

Someone filing on his own ndash he has to provide all these documents upfront

CREDITORrsquoS PETITION- Section 57 Bankruptcy Act- S57 BA Persons who may present creditorrsquos petition (includes joint petition by 2 or more creditors)- S58 BA Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors

etc must also be filed)- May be presented by

- one of the debtorrsquos creditors [s57(1)(a)(i)] or- jointly be more than one of them[s57(1)(a)(i)] or- the nominee supervising the implementation of the voluntary arrangement proposed by the

debtor [s57(1)(a)(ii)] not tt common bu in event tt bankruptcy act allows for vol arrangement - debtor may say want to

pay up and arrangements may be set up and nominee then supervises agreement- NB Debtor may be an individual or a firm comprising one or more partners [see s57(1)(b)]

ldquoVoluntary arrangementrdquo found in Part V of the BA this is technically not a bankruptcy but before the stage of bankruptcy- where a debtor is of the opinion that the creditors are pushing him too hard and does not want to be a

bankrupt can rely on the procedure of Part V to have a payment obligations set out- this requires the consent of ALL the creditors in general meeting where nominee will be nominated- if the debtor runs foul of the conditions of payment then the nominee can present the petition - see above

Administrative matters relating to the Creditorrsquos petition- bullA creditorrsquos petition must be in the prescribed form (Form 2-Rule 99)

Form of creditorrsquos bankruptcy application99 mdash(1) Every creditorrsquos bankruptcy application shall be made in Form 2 (2) For the purposes of such an application and all proceedings thereunder mdash

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

Nomineersquos report and Creditorsrsquo Meeting ndash s49-54- Nominee will report to the Court as to whether a creditorsrsquo meeting should be convened to consider the

debtorrsquos proposals ndash s49(1)(a)- If in his opinion such a meeting should be summoned the date on which and the time and place at which

he proposes the meeting should be held ndash s49(1)(b)- If Court is satisfied that such a meeting should be convened it will extend the validity of the interim order ndash

s49(5)

Summoning of creditorsrsquo meeting50 mdash(1) Where a nominee has reported to the court under section 49 that a meeting of the debtorrsquos creditors should be summoned the nominee shall unless the court otherwise directs summon that meeting in accordance with his report (2) The nominee shall summon to the meeting every of the debtorrsquos creditors of whose claim and address he is aware

Consideration and implementation of debtorrsquos proposalDecision of creditorsrsquo meeting51 mdash(1) A creditorsrsquo meeting summoned under section 50 may if the meeting thinks fit by special resolution resolve to approve the proposed voluntary arrangement whether with or without modification (2) The meeting shall not approve the proposed voluntary arrangement with any modification unless the debtor has consented to such modification (3) For the purpose of this section a modification subject to which a proposed voluntary arrangement may be approved by a creditorsrsquo meeting may confer the functions proposed to be conferred on the nominee on another person qualified to act as a nominee (4) No modification under subsection (3) shall alter the proposal to such an extent that it ceases to be a proposal for a voluntary arrangement by the debtor (5) The meeting shall not approve any proposal or any modification thereto which affects the right of a secured creditor of the debtor to enforce his security except with the concurrence of the secured creditor concerned (6) The meeting shall not without the concurrence of the preferential creditor concerned approve any proposal or any modification thereto under which mdash (a) any debt of the debtor not being a preferential debt is to be paid in priority to any preferential debt of the debtor or (b) any preferential debt of the debtor is to be paid in relation to any other preferential debt of the debtor other than in accordance with section 90 (7) Every meeting shall be conducted in accordance with the prescribed rules

(8) Any debtor who makes any false representation or commits any other fraud for the purpose of obtaining the approval of his creditors to a proposal for a voluntary arrangement shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both Report of decisions to court52 mdash(1) After the conclusion of the creditorsrsquo meeting summoned under section 50 the nominee shall report the result thereof to the court and shall serve a copy of the report on such persons as may be prescribed (2) Where the meeting has declined to approve the debtorrsquos proposal the court may discharge any interim order which is in force in relation to the debtor Effect of approval53 mdash(1) Where the creditorsrsquo meeting summoned under section 50 has approved the proposed voluntary arrangement whether with or without modifications the approved arrangement shall mdash (a) take effect as if made by the debtor at the meeting and (b) bind every person who had notice of and was entitled to vote at the meeting whether or not he was present or represented thereat as if he were a party to the arrangement (2) Subject to section 54 the interim order in force in relation to the debtor shall cease to have effect at the end of 28 days from the date the report was made to the court under section 52 (3) Where proceedings on a bankruptcy application have been stayed by an interim order which ceases to have effect under subsection (2) that application shall unless the court otherwise orders be deemed to have been dismissed Review of meetingrsquos decision54 mdash(1) Any debtor nominee or person entitled to vote at a creditorsrsquo meeting summoned under section 50 may apply to the court for a review of the decision of the meeting on the ground that mdash (a) the voluntary arrangement approved by the meeting unfairly prejudices the interests of the debtor or any of the debtorrsquos creditors or (b) there has been some material irregularity at or in relation to the meeting (2) Upon hearing an application under subsection (1) the court may if it thinks fit do one or both of the following (a) revoke or suspend any approval given by the meeting (b) direct any person to summon a further meeting of the debtorrsquos creditors to consider any revised proposal the debtor may make or in a case falling within subsection (1) (b) to reconsider the original proposal of the debtor (3) No application under this section shall be made after 28 days from the date the report was made to the court under section 52 (4) Where at any time after giving a direction under subsection (2) (b) for the summoning of a meeting to consider a revised proposal the court is satisfied that the debtor does not intend to submit such a proposal the court shall revoke the direction and revoke or suspend any approval given at the previous meeting (5) Upon giving a direction under subsection (2) (b) the court may if it thinks just extend the validity of any interim order in relation to the debtor for such period as it may think fit (6) Upon giving a direction or revoking or suspending an approval under this section the court may give such supplemental directions as it may think fit and in particular directions with respect to mdash (a) things done since the meeting under any voluntary arrangement approved by the meeting and (b) such things done since the meeting as could not have been done if an interim order had been in force in relation to the debtor when they were done (7) Except in pursuance of this section no approval given at a creditorsrsquo meeting summoned under section 50 shall be invalidated by reason only of any irregularity at or in relation to the meeting Implementation and supervision of approved voluntary arrangement55 mdash(1) Where a voluntary arrangement approved by a creditorsrsquo meeting summoned under section 50 has taken effect the nominee shall supervise the implementation of the voluntary arrangement (2) If the debtor or any of his creditors is dissatisfied by any act omission or decision of the nominee in his supervision of the implementation of the voluntary arrangement the debtor or creditor may apply to the court to review that act omission or decision (3) On hearing an application under subsection (2) the court may mdash (a) confirm reverse or modify any act or decision of the nominee or (b) give such directions to the nominee or make such order as it thinks fit (4) The nominee may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement (5) The court may whenever mdash (a) it is expedient to appoint a person to carry out the functions of the nominee and

(b) it is inexpedient difficult or impracticable for such an appointment to be made without the assistance of the court make an order appointing a person who is qualified to act as a nominee either in substitution for the existing nominee or to fill a vacancy

- After the creditorsrsquo meeting the nominee will report to the Court as to whether the debtorrsquos proposal has been approved by the creditors ndash s52(1)

- If the proposal is approved by the creditors the nominee will proceed to implement it ndash s53(1)(a) The creditors as well as the nominee may bring bankruptcy proceedings against the debtor if he subsequently fails to comply with the terms for a proposal which has been approved by the creditors IF the proposal is successfully implemented y the nominee the debtor will have effectively avoided bankruptcy

- If proposal is not approved the interim order will be discharged and the creditors will be at liberty to proceed against the debtor ndash s52(2)

ROLE OF THE OFFICIAL ASSIGNEE- Administration of individual insolvencies as trustee in bankruptcy and to balance the interests of creditors

bankrupt and the public- Assist creditors in recovering debts- Assist bankrupts to obtain discharge from bankruptcy

S125 Bankruptcy Act ndash Through a certificate of discharge or Application for discharge Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

- And Assist the community in dealing with the impact of individual and corporate financial failure ldquoCorporate financial failurerdquo refers to insolvent winding up of companies Interest of banker and creditor may be quite different Creditor wants money back Bankrupts want to avoid paying their debts ndash clash of interests

- Perform bankruptcy administration- bull Determine ownership recovery and realisation of bankruptsrsquo assets for distribution to creditors

Includes attending court to represent the bankruptrsquos estate in interpleaders

- bull Administer bankruptsrsquo outstanding legal suits and affairs Bankruptrsquos statement of affairs ndash deals with his assets and liabilities etc in many cases lawsuits wld have started before bankruptcy and stil in middle of lawsuit

when bankruptcy occurs so there will be goodie in dissolving lawsuits

- bull Prosecute errant bankrupts who breach their duties and obligations under the Bankruptcy Act This would entail investigations into the affairs and even to examine the complainant or

3rd parties to the financial transactions or even apply to issue warrants of arrest- bull Adjudicate creditorsrsquo claims by determining liability and amount- bull Mediate between bankrupts amp creditors to achieve debt settlement- bull Attend High Court hearings for purpose of discharging bankrupts from bankruptcy

hearings held in supreme court registry (on Thursdays at 9am)- bull Assist the Court as amicus curiae in matters concerning bankruptcy law and procedure

neutral party ndash official assignee court requires them to turn up and assist where the Court requires interpretation of the Bankruptcy Act and Rules by an

independent 3rd party the OA will be called in Eg where the bankrupt appeals against a bankruptcy holding by the Assistant Registrar

- bull Review and amend legislation policies and procedures official assignee department has cycle of review for obsolete procedures and see whether

new changes can be put into fact- bull Decide whether to sanction any action that the bankrupt wishes to commence or proceed with

upon analysing the merits of the case and the costs involved (see s131(1)(a) s165(5) of the Act)

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

impt when official assignee finds out wil put stop to ensure that the assets of the bankrupt are not dissipated towards unfruitful

ventures difficult to lawyer ndash

lawsuit stops in its tracks ndash official assigne wants security in terms of costs upfront and may amt to quite a lot s party suing (already bankrupt) will need to find third party to provide security in osts if not provided then lawsuit may be dismissed

and imptly whoeve lawyer representing feels tt not represented properly ndash may comploain tt lawyer neg in advising him

=gt so if client bankruptproceeding against bankrupt ndash must have relevant security ready

bull Attend Court at hearings of appeals or applications by bankrupt and third parties against any decision or act of the Official Assignee (see s31 of the Act)

whether to admit or refuse decisions can be appealed against OA asked to appear in court to defend decision Judge in HC will adjudicate

Review by court of Official Assigneersquos act omission or decision31 mdash(1) If a bankrupt or any of his creditors or any other person is dissatisfied by any act omission or decision of the Official Assignee in relation to the Official Assigneersquos administration of the bankruptrsquos estate he may apply to the court to review such act omission or decision (2) On hearing an application under subsection (1) the court may mdash (a) confirm reverse or modify any act or decision of the Official Assignee or (b) give such directions to the Official Assignee or make such other order as it may think fit (3) The Official Assignee may apply to the court for directions in relation to any particular matter arising under the bankruptcy

PETITION FOR BANKRUPTCY- 1048729 There are 2 types of bankruptcy petitions

Creditorrsquos petition (Section 57) ndash more common Debtorrsquos petition (Section 58) ndash self petition usu ccurs when person cannot stand it anymore

and wnts bankruoptcy prxtn and so applies for this Once petition successful -gt

Persons who may make creditorrsquos bankruptcy application57 mdash(1) Subject to this Part a creditorrsquos bankruptcy application may be made mdash (a) against an individual by mdash (i) one of the individualrsquos creditors or jointly by more than one of them or (ii) the nominee supervising the implementation of or any person (other than the individual) who is for the time being bound by a voluntary arrangement proposed by the individual and approved under Part V or (b) against a firm by mdash (i) one of the firmrsquos creditors or jointly by more than one of them if such creditor or creditors are entitled under paragraph (a) (i) to make a creditorrsquos petition against any one of the partners in the firm in respect of a partnership debt or (ii) the nominee supervising the implementation of or any person (other than the partners in the firm) who is for the time being bound by a voluntary arrangement proposed by the firm and approved under Part V (2) A creditor who is entitled to make a bankruptcy application against a firm under subsection (1) (b) may make a bankruptcy application against any of the partners in the firm without including the others (3) Every creditorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit of the creditor or of some person on his behalf having knowledge of the facts (4) Every creditorrsquos bankruptcy application shall be served in the manner prescribed

Persons who may make debtorrsquos bankruptcy application58 mdash(1) Subject to this Part a debtorrsquos bankruptcy application may be made mdash (a) against an individual debtor by the debtor himself or (b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the making of the application (2) A debtorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit to which is exhibited mdash (a) where the debtor is an individual a statement of his affairs containing such particulars of his assets creditors debts and other liabilities as may be prescribed (b) where the debtor is a firm a statement of mdash (i) the firmrsquos affairs containing such particulars of its assets creditors debts and other liabilities as may be prescribed and (ii) the affairs of each of the partners in the firm by whom the application is made containing such particulars of his assets creditors debts and other liabilities as may be prescribed and (c) a statement containing such other information as may be prescribed

Prima facie rule of OA as trustee may be varied - When a debtor is made a bankrupt by the Court the Official Assignee will administer his affairs in

bankruptcy unless the petitioner requests that a private trustee be appointed in place of the Official Assignee (Section 33)

o (latter rare usu occurs when debtor has a lot of overseas assets so want private trustee But this is very expensive

Appointment of person other than Official Assignee as trustee in bankruptcy33 mdash(1) The court may mdash (a) on making a bankruptcy order and (b) on the application of the creditor who applied for the bankruptcy order appoint a person other than the Official Assignee to be the trustee of the bankruptrsquos estate (2) The official name of the trustee shall be mdash (a) ldquothe Trustee of the estate of (name of bankrupt) a Bankruptrdquo or (b) ldquothe Trustee in Bankruptcy of (name of bankrupt) a Bankruptrdquo

Qualifications of a Trustee in Bankruptcy - s34- 1048729 A private trustee can be either a certified Public Accountant or a Solicitor or any person as prescribed by

the Minister (Section 34)- In addition must not be a person who has been convicted for a crime of dishonesty punishable with

imprisonment of more than 3 months [s34 - BA] - Petitioning creditors must obtin consent of person to be appted as trustee- S35 ndash private trustee reqd to furnish security to satisfaction of fofical assignee before commencing to act

failure to comply is offence punishable on conviction by fine not exceeding 10000

Qualifications for appointment as trustee34 No person shall be appointed as a trustee in bankruptcy unless he satisfies the court that mdash (a) he is mdash (i) registered as a public accountant under the Accountants Act (Cap 2A) (ii) an advocate and solicitor or (iii) such person as the Minister may by order published in the Gazette prescribe and (b) he has not been convicted of an offence involving fraud or dishonesty punishable on conviction by imprisonment for 3 months or more and he has consented in writing to being appointed as a trustee

- S361 ndash private trustee to have fn and duties and ex powers of official assignee- Powers include

Delegation of powers and fn by official trustee s19 Power to administer oaths s24 Power to seize bankruptrsquos assets s108 Power to appt special manager s113 Power to impound bankruptsrsquo passports s116 Discharge of bankrupt[ buy certi of officval assignee s125 Power to annul bankruptcy order by cert of annulment where creditor has approved debt settm

proposal by special resoln s95A Powwr to annul bankruptcy order by cert of annulment when bankrupt has paid debts of

creditors in full s123A Use of insolvency assistance fund s165

General functions duties and powers of trustee36 mdash(1) Subject to subsection (3) and section 39 a trustee shall mdash (a) have all the functions and duties of the Official Assignee in relation to the conduct of a bankrupt and the administration of his estate as provided in this Act and (b) exercise all the powers of the Official Assignee (2) Any reference in this Act or the rules to the Official Assignee shall unless the context otherwise requires include a reference to a trustee (3) Sections 19 24 95A 108 113 116 123A 125 and 165 shall not apply to a trustee and section 112 (a) (c) (f) (h) and (i) shall not apply to a trustee except with the consent of the court the creditorsrsquo committee or if there is no creditorsrsquo committee the Official Assignee

- Powers of official assignee which x apply to private trustee except with consent of court creditorsrsquo committee or official assignee or official assignee (where no creditorsrsquo committee) ndash

o S112a ndash carrying on business of bankrupto S112c ndash employing advocate and solicitor for legal proceedings or business purpose o S112f ndash referring of disputes to arbitration or compromising of debtso S112h ndash compromising of claims in relation to bankruptrsquos propertyo S112i ndash dividing property amongst creditors in existing form without first realizing it

- Section 38 ndash scheme for determination of trusteersquos remuneration- S39 ndash subj private trustee to control of official assignee who may apply to court for removal of trustee based

on investigation made under section

General powers of Official Assignee112 The Official Assignee may exercise any of the following powers (a) carry on any business of the bankrupt so far as is necessary for winding it up beneficially (b) bring institute or defend any action or legal proceedings relating to the property of the bankrupt (c) employ an advocate and solicitor to take any proceedings or do any business (d) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security or otherwise as he thinks fit (e) mortgage or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts (f) refer any dispute to arbitration or compromise all debts claims and liabilities whether present or future certain or contingent liquidated or unliquidated subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt on the receipt of such sums payable at such times and generally on such terms as are agreed on (g) make such compromise or other arrangement as is thought expedient with creditors or persons claiming to be creditors in respect of any debts provable under the bankruptcy (h) make such compromise or other arrangement as is thought expedient with respect to any claim arising out of or incidental to the property of the bankrupt made or capable of being made on the Official Assignee by any person or by the Official Assignee on any person and (i) divide in its existing form amongst the creditors according to its estimated value any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold Remuneration of trustee38 mdash(1) A trustee shall be entitled to receive such salary or remuneration as is determined in the following manner (a) by agreement between the trustee and the creditorsrsquo committee if any (b) failing any agreement with the creditorsrsquo committee or where there is no such committee by a special resolution of the creditors whose debts have been admitted for the purpose of voting and who are present in person or by proxy and voting at a meeting to be convened by the trustee by a notice to each creditor in accordance with subsection (2) or (c) failing a determination in the manner referred to in paragraph (a) or (b) by the court (2) The trustee shall attach to every notice under subsection (1) (b) a statement of all receipts and expenditure by the trustee and the amount of remuneration sought by him Control of trustee by Official Assignee39 mdash(1) The Official Assignee shall take cognizance of the conduct of a trustee in the administration of the estate of a bankrupt (2) If the trustee does not faithfully perform his duties or duly observe all the requirements imposed on him by this Act the rules or any other written law with respect to the performance of his duties or if any complaint is made to the Official Assignee by any creditor or bankrupt in regard thereto the Official Assignee shall inquire into the matter and take such action thereon as he may think expedient (3) The Official Assignee may mdash (a) at any time require a trustee to answer any inquiry in relation to his administration of the estate of a bankrupt and (b) also direct an investigation to be made of the books and vouchers of the trustee (4) It shall be the duty of the trustee mdash (a) to furnish the Official Assignee with such information (b) to produce to the Official Assignee and permit inspection by the Official Assignee of such books papers and other records and

(c) to give the Official Assignee such other assistance as the Official Assignee may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy (5) The Official Assignee may having regard to the results of any inquiry or investigation made under this section apply to the court for the removal of the trustee

Jurisdiction of the Court to hear bankruptcy petitionPursuant to s3 of the Bankruptcy Act a bankruptcy petition will be heard by the HC- first by the Registrar- then on appeal to a judge in chambers- this is necessitated because of the drastic change repercussion of granting of bankruptcy order

High Court to be the court having jurisdiction in bankruptcy3 Subject to any other written law the High Court shall be the court having jurisdiction in bankruptcy under this Act

WHO MAY PRESENT BANKRUPTCY PETITION- Section 57 Bankruptcy Act - Persons who may present creditorrsquos petition (includes joint petition by 2 or

more creditors) Costs involved in presenting this Stimes diff to recover 2 or more creditors may decide to put jt petition therefore less common more common ndash one creditor (main )doing all the work and other creditors turning up to give

moral support (not monetary)

- Section 58 Bankruptcy Act - Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors etc must also be filed together with the petition)

Someone filing on his own ndash he has to provide all these documents upfront

CREDITORrsquoS PETITION- Section 57 Bankruptcy Act- S57 BA Persons who may present creditorrsquos petition (includes joint petition by 2 or more creditors)- S58 BA Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors

etc must also be filed)- May be presented by

- one of the debtorrsquos creditors [s57(1)(a)(i)] or- jointly be more than one of them[s57(1)(a)(i)] or- the nominee supervising the implementation of the voluntary arrangement proposed by the

debtor [s57(1)(a)(ii)] not tt common bu in event tt bankruptcy act allows for vol arrangement - debtor may say want to

pay up and arrangements may be set up and nominee then supervises agreement- NB Debtor may be an individual or a firm comprising one or more partners [see s57(1)(b)]

ldquoVoluntary arrangementrdquo found in Part V of the BA this is technically not a bankruptcy but before the stage of bankruptcy- where a debtor is of the opinion that the creditors are pushing him too hard and does not want to be a

bankrupt can rely on the procedure of Part V to have a payment obligations set out- this requires the consent of ALL the creditors in general meeting where nominee will be nominated- if the debtor runs foul of the conditions of payment then the nominee can present the petition - see above

Administrative matters relating to the Creditorrsquos petition- bullA creditorrsquos petition must be in the prescribed form (Form 2-Rule 99)

Form of creditorrsquos bankruptcy application99 mdash(1) Every creditorrsquos bankruptcy application shall be made in Form 2 (2) For the purposes of such an application and all proceedings thereunder mdash

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(8) Any debtor who makes any false representation or commits any other fraud for the purpose of obtaining the approval of his creditors to a proposal for a voluntary arrangement shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both Report of decisions to court52 mdash(1) After the conclusion of the creditorsrsquo meeting summoned under section 50 the nominee shall report the result thereof to the court and shall serve a copy of the report on such persons as may be prescribed (2) Where the meeting has declined to approve the debtorrsquos proposal the court may discharge any interim order which is in force in relation to the debtor Effect of approval53 mdash(1) Where the creditorsrsquo meeting summoned under section 50 has approved the proposed voluntary arrangement whether with or without modifications the approved arrangement shall mdash (a) take effect as if made by the debtor at the meeting and (b) bind every person who had notice of and was entitled to vote at the meeting whether or not he was present or represented thereat as if he were a party to the arrangement (2) Subject to section 54 the interim order in force in relation to the debtor shall cease to have effect at the end of 28 days from the date the report was made to the court under section 52 (3) Where proceedings on a bankruptcy application have been stayed by an interim order which ceases to have effect under subsection (2) that application shall unless the court otherwise orders be deemed to have been dismissed Review of meetingrsquos decision54 mdash(1) Any debtor nominee or person entitled to vote at a creditorsrsquo meeting summoned under section 50 may apply to the court for a review of the decision of the meeting on the ground that mdash (a) the voluntary arrangement approved by the meeting unfairly prejudices the interests of the debtor or any of the debtorrsquos creditors or (b) there has been some material irregularity at or in relation to the meeting (2) Upon hearing an application under subsection (1) the court may if it thinks fit do one or both of the following (a) revoke or suspend any approval given by the meeting (b) direct any person to summon a further meeting of the debtorrsquos creditors to consider any revised proposal the debtor may make or in a case falling within subsection (1) (b) to reconsider the original proposal of the debtor (3) No application under this section shall be made after 28 days from the date the report was made to the court under section 52 (4) Where at any time after giving a direction under subsection (2) (b) for the summoning of a meeting to consider a revised proposal the court is satisfied that the debtor does not intend to submit such a proposal the court shall revoke the direction and revoke or suspend any approval given at the previous meeting (5) Upon giving a direction under subsection (2) (b) the court may if it thinks just extend the validity of any interim order in relation to the debtor for such period as it may think fit (6) Upon giving a direction or revoking or suspending an approval under this section the court may give such supplemental directions as it may think fit and in particular directions with respect to mdash (a) things done since the meeting under any voluntary arrangement approved by the meeting and (b) such things done since the meeting as could not have been done if an interim order had been in force in relation to the debtor when they were done (7) Except in pursuance of this section no approval given at a creditorsrsquo meeting summoned under section 50 shall be invalidated by reason only of any irregularity at or in relation to the meeting Implementation and supervision of approved voluntary arrangement55 mdash(1) Where a voluntary arrangement approved by a creditorsrsquo meeting summoned under section 50 has taken effect the nominee shall supervise the implementation of the voluntary arrangement (2) If the debtor or any of his creditors is dissatisfied by any act omission or decision of the nominee in his supervision of the implementation of the voluntary arrangement the debtor or creditor may apply to the court to review that act omission or decision (3) On hearing an application under subsection (2) the court may mdash (a) confirm reverse or modify any act or decision of the nominee or (b) give such directions to the nominee or make such order as it thinks fit (4) The nominee may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement (5) The court may whenever mdash (a) it is expedient to appoint a person to carry out the functions of the nominee and

(b) it is inexpedient difficult or impracticable for such an appointment to be made without the assistance of the court make an order appointing a person who is qualified to act as a nominee either in substitution for the existing nominee or to fill a vacancy

- After the creditorsrsquo meeting the nominee will report to the Court as to whether the debtorrsquos proposal has been approved by the creditors ndash s52(1)

- If the proposal is approved by the creditors the nominee will proceed to implement it ndash s53(1)(a) The creditors as well as the nominee may bring bankruptcy proceedings against the debtor if he subsequently fails to comply with the terms for a proposal which has been approved by the creditors IF the proposal is successfully implemented y the nominee the debtor will have effectively avoided bankruptcy

- If proposal is not approved the interim order will be discharged and the creditors will be at liberty to proceed against the debtor ndash s52(2)

ROLE OF THE OFFICIAL ASSIGNEE- Administration of individual insolvencies as trustee in bankruptcy and to balance the interests of creditors

bankrupt and the public- Assist creditors in recovering debts- Assist bankrupts to obtain discharge from bankruptcy

S125 Bankruptcy Act ndash Through a certificate of discharge or Application for discharge Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

- And Assist the community in dealing with the impact of individual and corporate financial failure ldquoCorporate financial failurerdquo refers to insolvent winding up of companies Interest of banker and creditor may be quite different Creditor wants money back Bankrupts want to avoid paying their debts ndash clash of interests

- Perform bankruptcy administration- bull Determine ownership recovery and realisation of bankruptsrsquo assets for distribution to creditors

Includes attending court to represent the bankruptrsquos estate in interpleaders

- bull Administer bankruptsrsquo outstanding legal suits and affairs Bankruptrsquos statement of affairs ndash deals with his assets and liabilities etc in many cases lawsuits wld have started before bankruptcy and stil in middle of lawsuit

when bankruptcy occurs so there will be goodie in dissolving lawsuits

- bull Prosecute errant bankrupts who breach their duties and obligations under the Bankruptcy Act This would entail investigations into the affairs and even to examine the complainant or

3rd parties to the financial transactions or even apply to issue warrants of arrest- bull Adjudicate creditorsrsquo claims by determining liability and amount- bull Mediate between bankrupts amp creditors to achieve debt settlement- bull Attend High Court hearings for purpose of discharging bankrupts from bankruptcy

hearings held in supreme court registry (on Thursdays at 9am)- bull Assist the Court as amicus curiae in matters concerning bankruptcy law and procedure

neutral party ndash official assignee court requires them to turn up and assist where the Court requires interpretation of the Bankruptcy Act and Rules by an

independent 3rd party the OA will be called in Eg where the bankrupt appeals against a bankruptcy holding by the Assistant Registrar

- bull Review and amend legislation policies and procedures official assignee department has cycle of review for obsolete procedures and see whether

new changes can be put into fact- bull Decide whether to sanction any action that the bankrupt wishes to commence or proceed with

upon analysing the merits of the case and the costs involved (see s131(1)(a) s165(5) of the Act)

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

impt when official assignee finds out wil put stop to ensure that the assets of the bankrupt are not dissipated towards unfruitful

ventures difficult to lawyer ndash

lawsuit stops in its tracks ndash official assigne wants security in terms of costs upfront and may amt to quite a lot s party suing (already bankrupt) will need to find third party to provide security in osts if not provided then lawsuit may be dismissed

and imptly whoeve lawyer representing feels tt not represented properly ndash may comploain tt lawyer neg in advising him

=gt so if client bankruptproceeding against bankrupt ndash must have relevant security ready

bull Attend Court at hearings of appeals or applications by bankrupt and third parties against any decision or act of the Official Assignee (see s31 of the Act)

whether to admit or refuse decisions can be appealed against OA asked to appear in court to defend decision Judge in HC will adjudicate

Review by court of Official Assigneersquos act omission or decision31 mdash(1) If a bankrupt or any of his creditors or any other person is dissatisfied by any act omission or decision of the Official Assignee in relation to the Official Assigneersquos administration of the bankruptrsquos estate he may apply to the court to review such act omission or decision (2) On hearing an application under subsection (1) the court may mdash (a) confirm reverse or modify any act or decision of the Official Assignee or (b) give such directions to the Official Assignee or make such other order as it may think fit (3) The Official Assignee may apply to the court for directions in relation to any particular matter arising under the bankruptcy

PETITION FOR BANKRUPTCY- 1048729 There are 2 types of bankruptcy petitions

Creditorrsquos petition (Section 57) ndash more common Debtorrsquos petition (Section 58) ndash self petition usu ccurs when person cannot stand it anymore

and wnts bankruoptcy prxtn and so applies for this Once petition successful -gt

Persons who may make creditorrsquos bankruptcy application57 mdash(1) Subject to this Part a creditorrsquos bankruptcy application may be made mdash (a) against an individual by mdash (i) one of the individualrsquos creditors or jointly by more than one of them or (ii) the nominee supervising the implementation of or any person (other than the individual) who is for the time being bound by a voluntary arrangement proposed by the individual and approved under Part V or (b) against a firm by mdash (i) one of the firmrsquos creditors or jointly by more than one of them if such creditor or creditors are entitled under paragraph (a) (i) to make a creditorrsquos petition against any one of the partners in the firm in respect of a partnership debt or (ii) the nominee supervising the implementation of or any person (other than the partners in the firm) who is for the time being bound by a voluntary arrangement proposed by the firm and approved under Part V (2) A creditor who is entitled to make a bankruptcy application against a firm under subsection (1) (b) may make a bankruptcy application against any of the partners in the firm without including the others (3) Every creditorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit of the creditor or of some person on his behalf having knowledge of the facts (4) Every creditorrsquos bankruptcy application shall be served in the manner prescribed

Persons who may make debtorrsquos bankruptcy application58 mdash(1) Subject to this Part a debtorrsquos bankruptcy application may be made mdash (a) against an individual debtor by the debtor himself or (b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the making of the application (2) A debtorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit to which is exhibited mdash (a) where the debtor is an individual a statement of his affairs containing such particulars of his assets creditors debts and other liabilities as may be prescribed (b) where the debtor is a firm a statement of mdash (i) the firmrsquos affairs containing such particulars of its assets creditors debts and other liabilities as may be prescribed and (ii) the affairs of each of the partners in the firm by whom the application is made containing such particulars of his assets creditors debts and other liabilities as may be prescribed and (c) a statement containing such other information as may be prescribed

Prima facie rule of OA as trustee may be varied - When a debtor is made a bankrupt by the Court the Official Assignee will administer his affairs in

bankruptcy unless the petitioner requests that a private trustee be appointed in place of the Official Assignee (Section 33)

o (latter rare usu occurs when debtor has a lot of overseas assets so want private trustee But this is very expensive

Appointment of person other than Official Assignee as trustee in bankruptcy33 mdash(1) The court may mdash (a) on making a bankruptcy order and (b) on the application of the creditor who applied for the bankruptcy order appoint a person other than the Official Assignee to be the trustee of the bankruptrsquos estate (2) The official name of the trustee shall be mdash (a) ldquothe Trustee of the estate of (name of bankrupt) a Bankruptrdquo or (b) ldquothe Trustee in Bankruptcy of (name of bankrupt) a Bankruptrdquo

Qualifications of a Trustee in Bankruptcy - s34- 1048729 A private trustee can be either a certified Public Accountant or a Solicitor or any person as prescribed by

the Minister (Section 34)- In addition must not be a person who has been convicted for a crime of dishonesty punishable with

imprisonment of more than 3 months [s34 - BA] - Petitioning creditors must obtin consent of person to be appted as trustee- S35 ndash private trustee reqd to furnish security to satisfaction of fofical assignee before commencing to act

failure to comply is offence punishable on conviction by fine not exceeding 10000

Qualifications for appointment as trustee34 No person shall be appointed as a trustee in bankruptcy unless he satisfies the court that mdash (a) he is mdash (i) registered as a public accountant under the Accountants Act (Cap 2A) (ii) an advocate and solicitor or (iii) such person as the Minister may by order published in the Gazette prescribe and (b) he has not been convicted of an offence involving fraud or dishonesty punishable on conviction by imprisonment for 3 months or more and he has consented in writing to being appointed as a trustee

- S361 ndash private trustee to have fn and duties and ex powers of official assignee- Powers include

Delegation of powers and fn by official trustee s19 Power to administer oaths s24 Power to seize bankruptrsquos assets s108 Power to appt special manager s113 Power to impound bankruptsrsquo passports s116 Discharge of bankrupt[ buy certi of officval assignee s125 Power to annul bankruptcy order by cert of annulment where creditor has approved debt settm

proposal by special resoln s95A Powwr to annul bankruptcy order by cert of annulment when bankrupt has paid debts of

creditors in full s123A Use of insolvency assistance fund s165

General functions duties and powers of trustee36 mdash(1) Subject to subsection (3) and section 39 a trustee shall mdash (a) have all the functions and duties of the Official Assignee in relation to the conduct of a bankrupt and the administration of his estate as provided in this Act and (b) exercise all the powers of the Official Assignee (2) Any reference in this Act or the rules to the Official Assignee shall unless the context otherwise requires include a reference to a trustee (3) Sections 19 24 95A 108 113 116 123A 125 and 165 shall not apply to a trustee and section 112 (a) (c) (f) (h) and (i) shall not apply to a trustee except with the consent of the court the creditorsrsquo committee or if there is no creditorsrsquo committee the Official Assignee

- Powers of official assignee which x apply to private trustee except with consent of court creditorsrsquo committee or official assignee or official assignee (where no creditorsrsquo committee) ndash

o S112a ndash carrying on business of bankrupto S112c ndash employing advocate and solicitor for legal proceedings or business purpose o S112f ndash referring of disputes to arbitration or compromising of debtso S112h ndash compromising of claims in relation to bankruptrsquos propertyo S112i ndash dividing property amongst creditors in existing form without first realizing it

- Section 38 ndash scheme for determination of trusteersquos remuneration- S39 ndash subj private trustee to control of official assignee who may apply to court for removal of trustee based

on investigation made under section

General powers of Official Assignee112 The Official Assignee may exercise any of the following powers (a) carry on any business of the bankrupt so far as is necessary for winding it up beneficially (b) bring institute or defend any action or legal proceedings relating to the property of the bankrupt (c) employ an advocate and solicitor to take any proceedings or do any business (d) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security or otherwise as he thinks fit (e) mortgage or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts (f) refer any dispute to arbitration or compromise all debts claims and liabilities whether present or future certain or contingent liquidated or unliquidated subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt on the receipt of such sums payable at such times and generally on such terms as are agreed on (g) make such compromise or other arrangement as is thought expedient with creditors or persons claiming to be creditors in respect of any debts provable under the bankruptcy (h) make such compromise or other arrangement as is thought expedient with respect to any claim arising out of or incidental to the property of the bankrupt made or capable of being made on the Official Assignee by any person or by the Official Assignee on any person and (i) divide in its existing form amongst the creditors according to its estimated value any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold Remuneration of trustee38 mdash(1) A trustee shall be entitled to receive such salary or remuneration as is determined in the following manner (a) by agreement between the trustee and the creditorsrsquo committee if any (b) failing any agreement with the creditorsrsquo committee or where there is no such committee by a special resolution of the creditors whose debts have been admitted for the purpose of voting and who are present in person or by proxy and voting at a meeting to be convened by the trustee by a notice to each creditor in accordance with subsection (2) or (c) failing a determination in the manner referred to in paragraph (a) or (b) by the court (2) The trustee shall attach to every notice under subsection (1) (b) a statement of all receipts and expenditure by the trustee and the amount of remuneration sought by him Control of trustee by Official Assignee39 mdash(1) The Official Assignee shall take cognizance of the conduct of a trustee in the administration of the estate of a bankrupt (2) If the trustee does not faithfully perform his duties or duly observe all the requirements imposed on him by this Act the rules or any other written law with respect to the performance of his duties or if any complaint is made to the Official Assignee by any creditor or bankrupt in regard thereto the Official Assignee shall inquire into the matter and take such action thereon as he may think expedient (3) The Official Assignee may mdash (a) at any time require a trustee to answer any inquiry in relation to his administration of the estate of a bankrupt and (b) also direct an investigation to be made of the books and vouchers of the trustee (4) It shall be the duty of the trustee mdash (a) to furnish the Official Assignee with such information (b) to produce to the Official Assignee and permit inspection by the Official Assignee of such books papers and other records and

(c) to give the Official Assignee such other assistance as the Official Assignee may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy (5) The Official Assignee may having regard to the results of any inquiry or investigation made under this section apply to the court for the removal of the trustee

Jurisdiction of the Court to hear bankruptcy petitionPursuant to s3 of the Bankruptcy Act a bankruptcy petition will be heard by the HC- first by the Registrar- then on appeal to a judge in chambers- this is necessitated because of the drastic change repercussion of granting of bankruptcy order

High Court to be the court having jurisdiction in bankruptcy3 Subject to any other written law the High Court shall be the court having jurisdiction in bankruptcy under this Act

WHO MAY PRESENT BANKRUPTCY PETITION- Section 57 Bankruptcy Act - Persons who may present creditorrsquos petition (includes joint petition by 2 or

more creditors) Costs involved in presenting this Stimes diff to recover 2 or more creditors may decide to put jt petition therefore less common more common ndash one creditor (main )doing all the work and other creditors turning up to give

moral support (not monetary)

- Section 58 Bankruptcy Act - Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors etc must also be filed together with the petition)

Someone filing on his own ndash he has to provide all these documents upfront

CREDITORrsquoS PETITION- Section 57 Bankruptcy Act- S57 BA Persons who may present creditorrsquos petition (includes joint petition by 2 or more creditors)- S58 BA Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors

etc must also be filed)- May be presented by

- one of the debtorrsquos creditors [s57(1)(a)(i)] or- jointly be more than one of them[s57(1)(a)(i)] or- the nominee supervising the implementation of the voluntary arrangement proposed by the

debtor [s57(1)(a)(ii)] not tt common bu in event tt bankruptcy act allows for vol arrangement - debtor may say want to

pay up and arrangements may be set up and nominee then supervises agreement- NB Debtor may be an individual or a firm comprising one or more partners [see s57(1)(b)]

ldquoVoluntary arrangementrdquo found in Part V of the BA this is technically not a bankruptcy but before the stage of bankruptcy- where a debtor is of the opinion that the creditors are pushing him too hard and does not want to be a

bankrupt can rely on the procedure of Part V to have a payment obligations set out- this requires the consent of ALL the creditors in general meeting where nominee will be nominated- if the debtor runs foul of the conditions of payment then the nominee can present the petition - see above

Administrative matters relating to the Creditorrsquos petition- bullA creditorrsquos petition must be in the prescribed form (Form 2-Rule 99)

Form of creditorrsquos bankruptcy application99 mdash(1) Every creditorrsquos bankruptcy application shall be made in Form 2 (2) For the purposes of such an application and all proceedings thereunder mdash

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(b) it is inexpedient difficult or impracticable for such an appointment to be made without the assistance of the court make an order appointing a person who is qualified to act as a nominee either in substitution for the existing nominee or to fill a vacancy

- After the creditorsrsquo meeting the nominee will report to the Court as to whether the debtorrsquos proposal has been approved by the creditors ndash s52(1)

- If the proposal is approved by the creditors the nominee will proceed to implement it ndash s53(1)(a) The creditors as well as the nominee may bring bankruptcy proceedings against the debtor if he subsequently fails to comply with the terms for a proposal which has been approved by the creditors IF the proposal is successfully implemented y the nominee the debtor will have effectively avoided bankruptcy

- If proposal is not approved the interim order will be discharged and the creditors will be at liberty to proceed against the debtor ndash s52(2)

ROLE OF THE OFFICIAL ASSIGNEE- Administration of individual insolvencies as trustee in bankruptcy and to balance the interests of creditors

bankrupt and the public- Assist creditors in recovering debts- Assist bankrupts to obtain discharge from bankruptcy

S125 Bankruptcy Act ndash Through a certificate of discharge or Application for discharge Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

- And Assist the community in dealing with the impact of individual and corporate financial failure ldquoCorporate financial failurerdquo refers to insolvent winding up of companies Interest of banker and creditor may be quite different Creditor wants money back Bankrupts want to avoid paying their debts ndash clash of interests

- Perform bankruptcy administration- bull Determine ownership recovery and realisation of bankruptsrsquo assets for distribution to creditors

Includes attending court to represent the bankruptrsquos estate in interpleaders

- bull Administer bankruptsrsquo outstanding legal suits and affairs Bankruptrsquos statement of affairs ndash deals with his assets and liabilities etc in many cases lawsuits wld have started before bankruptcy and stil in middle of lawsuit

when bankruptcy occurs so there will be goodie in dissolving lawsuits

- bull Prosecute errant bankrupts who breach their duties and obligations under the Bankruptcy Act This would entail investigations into the affairs and even to examine the complainant or

3rd parties to the financial transactions or even apply to issue warrants of arrest- bull Adjudicate creditorsrsquo claims by determining liability and amount- bull Mediate between bankrupts amp creditors to achieve debt settlement- bull Attend High Court hearings for purpose of discharging bankrupts from bankruptcy

hearings held in supreme court registry (on Thursdays at 9am)- bull Assist the Court as amicus curiae in matters concerning bankruptcy law and procedure

neutral party ndash official assignee court requires them to turn up and assist where the Court requires interpretation of the Bankruptcy Act and Rules by an

independent 3rd party the OA will be called in Eg where the bankrupt appeals against a bankruptcy holding by the Assistant Registrar

- bull Review and amend legislation policies and procedures official assignee department has cycle of review for obsolete procedures and see whether

new changes can be put into fact- bull Decide whether to sanction any action that the bankrupt wishes to commence or proceed with

upon analysing the merits of the case and the costs involved (see s131(1)(a) s165(5) of the Act)

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

impt when official assignee finds out wil put stop to ensure that the assets of the bankrupt are not dissipated towards unfruitful

ventures difficult to lawyer ndash

lawsuit stops in its tracks ndash official assigne wants security in terms of costs upfront and may amt to quite a lot s party suing (already bankrupt) will need to find third party to provide security in osts if not provided then lawsuit may be dismissed

and imptly whoeve lawyer representing feels tt not represented properly ndash may comploain tt lawyer neg in advising him

=gt so if client bankruptproceeding against bankrupt ndash must have relevant security ready

bull Attend Court at hearings of appeals or applications by bankrupt and third parties against any decision or act of the Official Assignee (see s31 of the Act)

whether to admit or refuse decisions can be appealed against OA asked to appear in court to defend decision Judge in HC will adjudicate

Review by court of Official Assigneersquos act omission or decision31 mdash(1) If a bankrupt or any of his creditors or any other person is dissatisfied by any act omission or decision of the Official Assignee in relation to the Official Assigneersquos administration of the bankruptrsquos estate he may apply to the court to review such act omission or decision (2) On hearing an application under subsection (1) the court may mdash (a) confirm reverse or modify any act or decision of the Official Assignee or (b) give such directions to the Official Assignee or make such other order as it may think fit (3) The Official Assignee may apply to the court for directions in relation to any particular matter arising under the bankruptcy

PETITION FOR BANKRUPTCY- 1048729 There are 2 types of bankruptcy petitions

Creditorrsquos petition (Section 57) ndash more common Debtorrsquos petition (Section 58) ndash self petition usu ccurs when person cannot stand it anymore

and wnts bankruoptcy prxtn and so applies for this Once petition successful -gt

Persons who may make creditorrsquos bankruptcy application57 mdash(1) Subject to this Part a creditorrsquos bankruptcy application may be made mdash (a) against an individual by mdash (i) one of the individualrsquos creditors or jointly by more than one of them or (ii) the nominee supervising the implementation of or any person (other than the individual) who is for the time being bound by a voluntary arrangement proposed by the individual and approved under Part V or (b) against a firm by mdash (i) one of the firmrsquos creditors or jointly by more than one of them if such creditor or creditors are entitled under paragraph (a) (i) to make a creditorrsquos petition against any one of the partners in the firm in respect of a partnership debt or (ii) the nominee supervising the implementation of or any person (other than the partners in the firm) who is for the time being bound by a voluntary arrangement proposed by the firm and approved under Part V (2) A creditor who is entitled to make a bankruptcy application against a firm under subsection (1) (b) may make a bankruptcy application against any of the partners in the firm without including the others (3) Every creditorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit of the creditor or of some person on his behalf having knowledge of the facts (4) Every creditorrsquos bankruptcy application shall be served in the manner prescribed

Persons who may make debtorrsquos bankruptcy application58 mdash(1) Subject to this Part a debtorrsquos bankruptcy application may be made mdash (a) against an individual debtor by the debtor himself or (b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the making of the application (2) A debtorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit to which is exhibited mdash (a) where the debtor is an individual a statement of his affairs containing such particulars of his assets creditors debts and other liabilities as may be prescribed (b) where the debtor is a firm a statement of mdash (i) the firmrsquos affairs containing such particulars of its assets creditors debts and other liabilities as may be prescribed and (ii) the affairs of each of the partners in the firm by whom the application is made containing such particulars of his assets creditors debts and other liabilities as may be prescribed and (c) a statement containing such other information as may be prescribed

Prima facie rule of OA as trustee may be varied - When a debtor is made a bankrupt by the Court the Official Assignee will administer his affairs in

bankruptcy unless the petitioner requests that a private trustee be appointed in place of the Official Assignee (Section 33)

o (latter rare usu occurs when debtor has a lot of overseas assets so want private trustee But this is very expensive

Appointment of person other than Official Assignee as trustee in bankruptcy33 mdash(1) The court may mdash (a) on making a bankruptcy order and (b) on the application of the creditor who applied for the bankruptcy order appoint a person other than the Official Assignee to be the trustee of the bankruptrsquos estate (2) The official name of the trustee shall be mdash (a) ldquothe Trustee of the estate of (name of bankrupt) a Bankruptrdquo or (b) ldquothe Trustee in Bankruptcy of (name of bankrupt) a Bankruptrdquo

Qualifications of a Trustee in Bankruptcy - s34- 1048729 A private trustee can be either a certified Public Accountant or a Solicitor or any person as prescribed by

the Minister (Section 34)- In addition must not be a person who has been convicted for a crime of dishonesty punishable with

imprisonment of more than 3 months [s34 - BA] - Petitioning creditors must obtin consent of person to be appted as trustee- S35 ndash private trustee reqd to furnish security to satisfaction of fofical assignee before commencing to act

failure to comply is offence punishable on conviction by fine not exceeding 10000

Qualifications for appointment as trustee34 No person shall be appointed as a trustee in bankruptcy unless he satisfies the court that mdash (a) he is mdash (i) registered as a public accountant under the Accountants Act (Cap 2A) (ii) an advocate and solicitor or (iii) such person as the Minister may by order published in the Gazette prescribe and (b) he has not been convicted of an offence involving fraud or dishonesty punishable on conviction by imprisonment for 3 months or more and he has consented in writing to being appointed as a trustee

- S361 ndash private trustee to have fn and duties and ex powers of official assignee- Powers include

Delegation of powers and fn by official trustee s19 Power to administer oaths s24 Power to seize bankruptrsquos assets s108 Power to appt special manager s113 Power to impound bankruptsrsquo passports s116 Discharge of bankrupt[ buy certi of officval assignee s125 Power to annul bankruptcy order by cert of annulment where creditor has approved debt settm

proposal by special resoln s95A Powwr to annul bankruptcy order by cert of annulment when bankrupt has paid debts of

creditors in full s123A Use of insolvency assistance fund s165

General functions duties and powers of trustee36 mdash(1) Subject to subsection (3) and section 39 a trustee shall mdash (a) have all the functions and duties of the Official Assignee in relation to the conduct of a bankrupt and the administration of his estate as provided in this Act and (b) exercise all the powers of the Official Assignee (2) Any reference in this Act or the rules to the Official Assignee shall unless the context otherwise requires include a reference to a trustee (3) Sections 19 24 95A 108 113 116 123A 125 and 165 shall not apply to a trustee and section 112 (a) (c) (f) (h) and (i) shall not apply to a trustee except with the consent of the court the creditorsrsquo committee or if there is no creditorsrsquo committee the Official Assignee

- Powers of official assignee which x apply to private trustee except with consent of court creditorsrsquo committee or official assignee or official assignee (where no creditorsrsquo committee) ndash

o S112a ndash carrying on business of bankrupto S112c ndash employing advocate and solicitor for legal proceedings or business purpose o S112f ndash referring of disputes to arbitration or compromising of debtso S112h ndash compromising of claims in relation to bankruptrsquos propertyo S112i ndash dividing property amongst creditors in existing form without first realizing it

- Section 38 ndash scheme for determination of trusteersquos remuneration- S39 ndash subj private trustee to control of official assignee who may apply to court for removal of trustee based

on investigation made under section

General powers of Official Assignee112 The Official Assignee may exercise any of the following powers (a) carry on any business of the bankrupt so far as is necessary for winding it up beneficially (b) bring institute or defend any action or legal proceedings relating to the property of the bankrupt (c) employ an advocate and solicitor to take any proceedings or do any business (d) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security or otherwise as he thinks fit (e) mortgage or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts (f) refer any dispute to arbitration or compromise all debts claims and liabilities whether present or future certain or contingent liquidated or unliquidated subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt on the receipt of such sums payable at such times and generally on such terms as are agreed on (g) make such compromise or other arrangement as is thought expedient with creditors or persons claiming to be creditors in respect of any debts provable under the bankruptcy (h) make such compromise or other arrangement as is thought expedient with respect to any claim arising out of or incidental to the property of the bankrupt made or capable of being made on the Official Assignee by any person or by the Official Assignee on any person and (i) divide in its existing form amongst the creditors according to its estimated value any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold Remuneration of trustee38 mdash(1) A trustee shall be entitled to receive such salary or remuneration as is determined in the following manner (a) by agreement between the trustee and the creditorsrsquo committee if any (b) failing any agreement with the creditorsrsquo committee or where there is no such committee by a special resolution of the creditors whose debts have been admitted for the purpose of voting and who are present in person or by proxy and voting at a meeting to be convened by the trustee by a notice to each creditor in accordance with subsection (2) or (c) failing a determination in the manner referred to in paragraph (a) or (b) by the court (2) The trustee shall attach to every notice under subsection (1) (b) a statement of all receipts and expenditure by the trustee and the amount of remuneration sought by him Control of trustee by Official Assignee39 mdash(1) The Official Assignee shall take cognizance of the conduct of a trustee in the administration of the estate of a bankrupt (2) If the trustee does not faithfully perform his duties or duly observe all the requirements imposed on him by this Act the rules or any other written law with respect to the performance of his duties or if any complaint is made to the Official Assignee by any creditor or bankrupt in regard thereto the Official Assignee shall inquire into the matter and take such action thereon as he may think expedient (3) The Official Assignee may mdash (a) at any time require a trustee to answer any inquiry in relation to his administration of the estate of a bankrupt and (b) also direct an investigation to be made of the books and vouchers of the trustee (4) It shall be the duty of the trustee mdash (a) to furnish the Official Assignee with such information (b) to produce to the Official Assignee and permit inspection by the Official Assignee of such books papers and other records and

(c) to give the Official Assignee such other assistance as the Official Assignee may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy (5) The Official Assignee may having regard to the results of any inquiry or investigation made under this section apply to the court for the removal of the trustee

Jurisdiction of the Court to hear bankruptcy petitionPursuant to s3 of the Bankruptcy Act a bankruptcy petition will be heard by the HC- first by the Registrar- then on appeal to a judge in chambers- this is necessitated because of the drastic change repercussion of granting of bankruptcy order

High Court to be the court having jurisdiction in bankruptcy3 Subject to any other written law the High Court shall be the court having jurisdiction in bankruptcy under this Act

WHO MAY PRESENT BANKRUPTCY PETITION- Section 57 Bankruptcy Act - Persons who may present creditorrsquos petition (includes joint petition by 2 or

more creditors) Costs involved in presenting this Stimes diff to recover 2 or more creditors may decide to put jt petition therefore less common more common ndash one creditor (main )doing all the work and other creditors turning up to give

moral support (not monetary)

- Section 58 Bankruptcy Act - Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors etc must also be filed together with the petition)

Someone filing on his own ndash he has to provide all these documents upfront

CREDITORrsquoS PETITION- Section 57 Bankruptcy Act- S57 BA Persons who may present creditorrsquos petition (includes joint petition by 2 or more creditors)- S58 BA Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors

etc must also be filed)- May be presented by

- one of the debtorrsquos creditors [s57(1)(a)(i)] or- jointly be more than one of them[s57(1)(a)(i)] or- the nominee supervising the implementation of the voluntary arrangement proposed by the

debtor [s57(1)(a)(ii)] not tt common bu in event tt bankruptcy act allows for vol arrangement - debtor may say want to

pay up and arrangements may be set up and nominee then supervises agreement- NB Debtor may be an individual or a firm comprising one or more partners [see s57(1)(b)]

ldquoVoluntary arrangementrdquo found in Part V of the BA this is technically not a bankruptcy but before the stage of bankruptcy- where a debtor is of the opinion that the creditors are pushing him too hard and does not want to be a

bankrupt can rely on the procedure of Part V to have a payment obligations set out- this requires the consent of ALL the creditors in general meeting where nominee will be nominated- if the debtor runs foul of the conditions of payment then the nominee can present the petition - see above

Administrative matters relating to the Creditorrsquos petition- bullA creditorrsquos petition must be in the prescribed form (Form 2-Rule 99)

Form of creditorrsquos bankruptcy application99 mdash(1) Every creditorrsquos bankruptcy application shall be made in Form 2 (2) For the purposes of such an application and all proceedings thereunder mdash

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

neutral party ndash official assignee court requires them to turn up and assist where the Court requires interpretation of the Bankruptcy Act and Rules by an

independent 3rd party the OA will be called in Eg where the bankrupt appeals against a bankruptcy holding by the Assistant Registrar

- bull Review and amend legislation policies and procedures official assignee department has cycle of review for obsolete procedures and see whether

new changes can be put into fact- bull Decide whether to sanction any action that the bankrupt wishes to commence or proceed with

upon analysing the merits of the case and the costs involved (see s131(1)(a) s165(5) of the Act)

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

impt when official assignee finds out wil put stop to ensure that the assets of the bankrupt are not dissipated towards unfruitful

ventures difficult to lawyer ndash

lawsuit stops in its tracks ndash official assigne wants security in terms of costs upfront and may amt to quite a lot s party suing (already bankrupt) will need to find third party to provide security in osts if not provided then lawsuit may be dismissed

and imptly whoeve lawyer representing feels tt not represented properly ndash may comploain tt lawyer neg in advising him

=gt so if client bankruptproceeding against bankrupt ndash must have relevant security ready

bull Attend Court at hearings of appeals or applications by bankrupt and third parties against any decision or act of the Official Assignee (see s31 of the Act)

whether to admit or refuse decisions can be appealed against OA asked to appear in court to defend decision Judge in HC will adjudicate

Review by court of Official Assigneersquos act omission or decision31 mdash(1) If a bankrupt or any of his creditors or any other person is dissatisfied by any act omission or decision of the Official Assignee in relation to the Official Assigneersquos administration of the bankruptrsquos estate he may apply to the court to review such act omission or decision (2) On hearing an application under subsection (1) the court may mdash (a) confirm reverse or modify any act or decision of the Official Assignee or (b) give such directions to the Official Assignee or make such other order as it may think fit (3) The Official Assignee may apply to the court for directions in relation to any particular matter arising under the bankruptcy

PETITION FOR BANKRUPTCY- 1048729 There are 2 types of bankruptcy petitions

Creditorrsquos petition (Section 57) ndash more common Debtorrsquos petition (Section 58) ndash self petition usu ccurs when person cannot stand it anymore

and wnts bankruoptcy prxtn and so applies for this Once petition successful -gt

Persons who may make creditorrsquos bankruptcy application57 mdash(1) Subject to this Part a creditorrsquos bankruptcy application may be made mdash (a) against an individual by mdash (i) one of the individualrsquos creditors or jointly by more than one of them or (ii) the nominee supervising the implementation of or any person (other than the individual) who is for the time being bound by a voluntary arrangement proposed by the individual and approved under Part V or (b) against a firm by mdash (i) one of the firmrsquos creditors or jointly by more than one of them if such creditor or creditors are entitled under paragraph (a) (i) to make a creditorrsquos petition against any one of the partners in the firm in respect of a partnership debt or (ii) the nominee supervising the implementation of or any person (other than the partners in the firm) who is for the time being bound by a voluntary arrangement proposed by the firm and approved under Part V (2) A creditor who is entitled to make a bankruptcy application against a firm under subsection (1) (b) may make a bankruptcy application against any of the partners in the firm without including the others (3) Every creditorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit of the creditor or of some person on his behalf having knowledge of the facts (4) Every creditorrsquos bankruptcy application shall be served in the manner prescribed

Persons who may make debtorrsquos bankruptcy application58 mdash(1) Subject to this Part a debtorrsquos bankruptcy application may be made mdash (a) against an individual debtor by the debtor himself or (b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the making of the application (2) A debtorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit to which is exhibited mdash (a) where the debtor is an individual a statement of his affairs containing such particulars of his assets creditors debts and other liabilities as may be prescribed (b) where the debtor is a firm a statement of mdash (i) the firmrsquos affairs containing such particulars of its assets creditors debts and other liabilities as may be prescribed and (ii) the affairs of each of the partners in the firm by whom the application is made containing such particulars of his assets creditors debts and other liabilities as may be prescribed and (c) a statement containing such other information as may be prescribed

Prima facie rule of OA as trustee may be varied - When a debtor is made a bankrupt by the Court the Official Assignee will administer his affairs in

bankruptcy unless the petitioner requests that a private trustee be appointed in place of the Official Assignee (Section 33)

o (latter rare usu occurs when debtor has a lot of overseas assets so want private trustee But this is very expensive

Appointment of person other than Official Assignee as trustee in bankruptcy33 mdash(1) The court may mdash (a) on making a bankruptcy order and (b) on the application of the creditor who applied for the bankruptcy order appoint a person other than the Official Assignee to be the trustee of the bankruptrsquos estate (2) The official name of the trustee shall be mdash (a) ldquothe Trustee of the estate of (name of bankrupt) a Bankruptrdquo or (b) ldquothe Trustee in Bankruptcy of (name of bankrupt) a Bankruptrdquo

Qualifications of a Trustee in Bankruptcy - s34- 1048729 A private trustee can be either a certified Public Accountant or a Solicitor or any person as prescribed by

the Minister (Section 34)- In addition must not be a person who has been convicted for a crime of dishonesty punishable with

imprisonment of more than 3 months [s34 - BA] - Petitioning creditors must obtin consent of person to be appted as trustee- S35 ndash private trustee reqd to furnish security to satisfaction of fofical assignee before commencing to act

failure to comply is offence punishable on conviction by fine not exceeding 10000

Qualifications for appointment as trustee34 No person shall be appointed as a trustee in bankruptcy unless he satisfies the court that mdash (a) he is mdash (i) registered as a public accountant under the Accountants Act (Cap 2A) (ii) an advocate and solicitor or (iii) such person as the Minister may by order published in the Gazette prescribe and (b) he has not been convicted of an offence involving fraud or dishonesty punishable on conviction by imprisonment for 3 months or more and he has consented in writing to being appointed as a trustee

- S361 ndash private trustee to have fn and duties and ex powers of official assignee- Powers include

Delegation of powers and fn by official trustee s19 Power to administer oaths s24 Power to seize bankruptrsquos assets s108 Power to appt special manager s113 Power to impound bankruptsrsquo passports s116 Discharge of bankrupt[ buy certi of officval assignee s125 Power to annul bankruptcy order by cert of annulment where creditor has approved debt settm

proposal by special resoln s95A Powwr to annul bankruptcy order by cert of annulment when bankrupt has paid debts of

creditors in full s123A Use of insolvency assistance fund s165

General functions duties and powers of trustee36 mdash(1) Subject to subsection (3) and section 39 a trustee shall mdash (a) have all the functions and duties of the Official Assignee in relation to the conduct of a bankrupt and the administration of his estate as provided in this Act and (b) exercise all the powers of the Official Assignee (2) Any reference in this Act or the rules to the Official Assignee shall unless the context otherwise requires include a reference to a trustee (3) Sections 19 24 95A 108 113 116 123A 125 and 165 shall not apply to a trustee and section 112 (a) (c) (f) (h) and (i) shall not apply to a trustee except with the consent of the court the creditorsrsquo committee or if there is no creditorsrsquo committee the Official Assignee

- Powers of official assignee which x apply to private trustee except with consent of court creditorsrsquo committee or official assignee or official assignee (where no creditorsrsquo committee) ndash

o S112a ndash carrying on business of bankrupto S112c ndash employing advocate and solicitor for legal proceedings or business purpose o S112f ndash referring of disputes to arbitration or compromising of debtso S112h ndash compromising of claims in relation to bankruptrsquos propertyo S112i ndash dividing property amongst creditors in existing form without first realizing it

- Section 38 ndash scheme for determination of trusteersquos remuneration- S39 ndash subj private trustee to control of official assignee who may apply to court for removal of trustee based

on investigation made under section

General powers of Official Assignee112 The Official Assignee may exercise any of the following powers (a) carry on any business of the bankrupt so far as is necessary for winding it up beneficially (b) bring institute or defend any action or legal proceedings relating to the property of the bankrupt (c) employ an advocate and solicitor to take any proceedings or do any business (d) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security or otherwise as he thinks fit (e) mortgage or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts (f) refer any dispute to arbitration or compromise all debts claims and liabilities whether present or future certain or contingent liquidated or unliquidated subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt on the receipt of such sums payable at such times and generally on such terms as are agreed on (g) make such compromise or other arrangement as is thought expedient with creditors or persons claiming to be creditors in respect of any debts provable under the bankruptcy (h) make such compromise or other arrangement as is thought expedient with respect to any claim arising out of or incidental to the property of the bankrupt made or capable of being made on the Official Assignee by any person or by the Official Assignee on any person and (i) divide in its existing form amongst the creditors according to its estimated value any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold Remuneration of trustee38 mdash(1) A trustee shall be entitled to receive such salary or remuneration as is determined in the following manner (a) by agreement between the trustee and the creditorsrsquo committee if any (b) failing any agreement with the creditorsrsquo committee or where there is no such committee by a special resolution of the creditors whose debts have been admitted for the purpose of voting and who are present in person or by proxy and voting at a meeting to be convened by the trustee by a notice to each creditor in accordance with subsection (2) or (c) failing a determination in the manner referred to in paragraph (a) or (b) by the court (2) The trustee shall attach to every notice under subsection (1) (b) a statement of all receipts and expenditure by the trustee and the amount of remuneration sought by him Control of trustee by Official Assignee39 mdash(1) The Official Assignee shall take cognizance of the conduct of a trustee in the administration of the estate of a bankrupt (2) If the trustee does not faithfully perform his duties or duly observe all the requirements imposed on him by this Act the rules or any other written law with respect to the performance of his duties or if any complaint is made to the Official Assignee by any creditor or bankrupt in regard thereto the Official Assignee shall inquire into the matter and take such action thereon as he may think expedient (3) The Official Assignee may mdash (a) at any time require a trustee to answer any inquiry in relation to his administration of the estate of a bankrupt and (b) also direct an investigation to be made of the books and vouchers of the trustee (4) It shall be the duty of the trustee mdash (a) to furnish the Official Assignee with such information (b) to produce to the Official Assignee and permit inspection by the Official Assignee of such books papers and other records and

(c) to give the Official Assignee such other assistance as the Official Assignee may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy (5) The Official Assignee may having regard to the results of any inquiry or investigation made under this section apply to the court for the removal of the trustee

Jurisdiction of the Court to hear bankruptcy petitionPursuant to s3 of the Bankruptcy Act a bankruptcy petition will be heard by the HC- first by the Registrar- then on appeal to a judge in chambers- this is necessitated because of the drastic change repercussion of granting of bankruptcy order

High Court to be the court having jurisdiction in bankruptcy3 Subject to any other written law the High Court shall be the court having jurisdiction in bankruptcy under this Act

WHO MAY PRESENT BANKRUPTCY PETITION- Section 57 Bankruptcy Act - Persons who may present creditorrsquos petition (includes joint petition by 2 or

more creditors) Costs involved in presenting this Stimes diff to recover 2 or more creditors may decide to put jt petition therefore less common more common ndash one creditor (main )doing all the work and other creditors turning up to give

moral support (not monetary)

- Section 58 Bankruptcy Act - Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors etc must also be filed together with the petition)

Someone filing on his own ndash he has to provide all these documents upfront

CREDITORrsquoS PETITION- Section 57 Bankruptcy Act- S57 BA Persons who may present creditorrsquos petition (includes joint petition by 2 or more creditors)- S58 BA Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors

etc must also be filed)- May be presented by

- one of the debtorrsquos creditors [s57(1)(a)(i)] or- jointly be more than one of them[s57(1)(a)(i)] or- the nominee supervising the implementation of the voluntary arrangement proposed by the

debtor [s57(1)(a)(ii)] not tt common bu in event tt bankruptcy act allows for vol arrangement - debtor may say want to

pay up and arrangements may be set up and nominee then supervises agreement- NB Debtor may be an individual or a firm comprising one or more partners [see s57(1)(b)]

ldquoVoluntary arrangementrdquo found in Part V of the BA this is technically not a bankruptcy but before the stage of bankruptcy- where a debtor is of the opinion that the creditors are pushing him too hard and does not want to be a

bankrupt can rely on the procedure of Part V to have a payment obligations set out- this requires the consent of ALL the creditors in general meeting where nominee will be nominated- if the debtor runs foul of the conditions of payment then the nominee can present the petition - see above

Administrative matters relating to the Creditorrsquos petition- bullA creditorrsquos petition must be in the prescribed form (Form 2-Rule 99)

Form of creditorrsquos bankruptcy application99 mdash(1) Every creditorrsquos bankruptcy application shall be made in Form 2 (2) For the purposes of such an application and all proceedings thereunder mdash

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

=gt so if client bankruptproceeding against bankrupt ndash must have relevant security ready

bull Attend Court at hearings of appeals or applications by bankrupt and third parties against any decision or act of the Official Assignee (see s31 of the Act)

whether to admit or refuse decisions can be appealed against OA asked to appear in court to defend decision Judge in HC will adjudicate

Review by court of Official Assigneersquos act omission or decision31 mdash(1) If a bankrupt or any of his creditors or any other person is dissatisfied by any act omission or decision of the Official Assignee in relation to the Official Assigneersquos administration of the bankruptrsquos estate he may apply to the court to review such act omission or decision (2) On hearing an application under subsection (1) the court may mdash (a) confirm reverse or modify any act or decision of the Official Assignee or (b) give such directions to the Official Assignee or make such other order as it may think fit (3) The Official Assignee may apply to the court for directions in relation to any particular matter arising under the bankruptcy

PETITION FOR BANKRUPTCY- 1048729 There are 2 types of bankruptcy petitions

Creditorrsquos petition (Section 57) ndash more common Debtorrsquos petition (Section 58) ndash self petition usu ccurs when person cannot stand it anymore

and wnts bankruoptcy prxtn and so applies for this Once petition successful -gt

Persons who may make creditorrsquos bankruptcy application57 mdash(1) Subject to this Part a creditorrsquos bankruptcy application may be made mdash (a) against an individual by mdash (i) one of the individualrsquos creditors or jointly by more than one of them or (ii) the nominee supervising the implementation of or any person (other than the individual) who is for the time being bound by a voluntary arrangement proposed by the individual and approved under Part V or (b) against a firm by mdash (i) one of the firmrsquos creditors or jointly by more than one of them if such creditor or creditors are entitled under paragraph (a) (i) to make a creditorrsquos petition against any one of the partners in the firm in respect of a partnership debt or (ii) the nominee supervising the implementation of or any person (other than the partners in the firm) who is for the time being bound by a voluntary arrangement proposed by the firm and approved under Part V (2) A creditor who is entitled to make a bankruptcy application against a firm under subsection (1) (b) may make a bankruptcy application against any of the partners in the firm without including the others (3) Every creditorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit of the creditor or of some person on his behalf having knowledge of the facts (4) Every creditorrsquos bankruptcy application shall be served in the manner prescribed

Persons who may make debtorrsquos bankruptcy application58 mdash(1) Subject to this Part a debtorrsquos bankruptcy application may be made mdash (a) against an individual debtor by the debtor himself or (b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the making of the application (2) A debtorrsquos bankruptcy application shall be in the prescribed form and shall be supported by an affidavit to which is exhibited mdash (a) where the debtor is an individual a statement of his affairs containing such particulars of his assets creditors debts and other liabilities as may be prescribed (b) where the debtor is a firm a statement of mdash (i) the firmrsquos affairs containing such particulars of its assets creditors debts and other liabilities as may be prescribed and (ii) the affairs of each of the partners in the firm by whom the application is made containing such particulars of his assets creditors debts and other liabilities as may be prescribed and (c) a statement containing such other information as may be prescribed

Prima facie rule of OA as trustee may be varied - When a debtor is made a bankrupt by the Court the Official Assignee will administer his affairs in

bankruptcy unless the petitioner requests that a private trustee be appointed in place of the Official Assignee (Section 33)

o (latter rare usu occurs when debtor has a lot of overseas assets so want private trustee But this is very expensive

Appointment of person other than Official Assignee as trustee in bankruptcy33 mdash(1) The court may mdash (a) on making a bankruptcy order and (b) on the application of the creditor who applied for the bankruptcy order appoint a person other than the Official Assignee to be the trustee of the bankruptrsquos estate (2) The official name of the trustee shall be mdash (a) ldquothe Trustee of the estate of (name of bankrupt) a Bankruptrdquo or (b) ldquothe Trustee in Bankruptcy of (name of bankrupt) a Bankruptrdquo

Qualifications of a Trustee in Bankruptcy - s34- 1048729 A private trustee can be either a certified Public Accountant or a Solicitor or any person as prescribed by

the Minister (Section 34)- In addition must not be a person who has been convicted for a crime of dishonesty punishable with

imprisonment of more than 3 months [s34 - BA] - Petitioning creditors must obtin consent of person to be appted as trustee- S35 ndash private trustee reqd to furnish security to satisfaction of fofical assignee before commencing to act

failure to comply is offence punishable on conviction by fine not exceeding 10000

Qualifications for appointment as trustee34 No person shall be appointed as a trustee in bankruptcy unless he satisfies the court that mdash (a) he is mdash (i) registered as a public accountant under the Accountants Act (Cap 2A) (ii) an advocate and solicitor or (iii) such person as the Minister may by order published in the Gazette prescribe and (b) he has not been convicted of an offence involving fraud or dishonesty punishable on conviction by imprisonment for 3 months or more and he has consented in writing to being appointed as a trustee

- S361 ndash private trustee to have fn and duties and ex powers of official assignee- Powers include

Delegation of powers and fn by official trustee s19 Power to administer oaths s24 Power to seize bankruptrsquos assets s108 Power to appt special manager s113 Power to impound bankruptsrsquo passports s116 Discharge of bankrupt[ buy certi of officval assignee s125 Power to annul bankruptcy order by cert of annulment where creditor has approved debt settm

proposal by special resoln s95A Powwr to annul bankruptcy order by cert of annulment when bankrupt has paid debts of

creditors in full s123A Use of insolvency assistance fund s165

General functions duties and powers of trustee36 mdash(1) Subject to subsection (3) and section 39 a trustee shall mdash (a) have all the functions and duties of the Official Assignee in relation to the conduct of a bankrupt and the administration of his estate as provided in this Act and (b) exercise all the powers of the Official Assignee (2) Any reference in this Act or the rules to the Official Assignee shall unless the context otherwise requires include a reference to a trustee (3) Sections 19 24 95A 108 113 116 123A 125 and 165 shall not apply to a trustee and section 112 (a) (c) (f) (h) and (i) shall not apply to a trustee except with the consent of the court the creditorsrsquo committee or if there is no creditorsrsquo committee the Official Assignee

- Powers of official assignee which x apply to private trustee except with consent of court creditorsrsquo committee or official assignee or official assignee (where no creditorsrsquo committee) ndash

o S112a ndash carrying on business of bankrupto S112c ndash employing advocate and solicitor for legal proceedings or business purpose o S112f ndash referring of disputes to arbitration or compromising of debtso S112h ndash compromising of claims in relation to bankruptrsquos propertyo S112i ndash dividing property amongst creditors in existing form without first realizing it

- Section 38 ndash scheme for determination of trusteersquos remuneration- S39 ndash subj private trustee to control of official assignee who may apply to court for removal of trustee based

on investigation made under section

General powers of Official Assignee112 The Official Assignee may exercise any of the following powers (a) carry on any business of the bankrupt so far as is necessary for winding it up beneficially (b) bring institute or defend any action or legal proceedings relating to the property of the bankrupt (c) employ an advocate and solicitor to take any proceedings or do any business (d) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security or otherwise as he thinks fit (e) mortgage or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts (f) refer any dispute to arbitration or compromise all debts claims and liabilities whether present or future certain or contingent liquidated or unliquidated subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt on the receipt of such sums payable at such times and generally on such terms as are agreed on (g) make such compromise or other arrangement as is thought expedient with creditors or persons claiming to be creditors in respect of any debts provable under the bankruptcy (h) make such compromise or other arrangement as is thought expedient with respect to any claim arising out of or incidental to the property of the bankrupt made or capable of being made on the Official Assignee by any person or by the Official Assignee on any person and (i) divide in its existing form amongst the creditors according to its estimated value any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold Remuneration of trustee38 mdash(1) A trustee shall be entitled to receive such salary or remuneration as is determined in the following manner (a) by agreement between the trustee and the creditorsrsquo committee if any (b) failing any agreement with the creditorsrsquo committee or where there is no such committee by a special resolution of the creditors whose debts have been admitted for the purpose of voting and who are present in person or by proxy and voting at a meeting to be convened by the trustee by a notice to each creditor in accordance with subsection (2) or (c) failing a determination in the manner referred to in paragraph (a) or (b) by the court (2) The trustee shall attach to every notice under subsection (1) (b) a statement of all receipts and expenditure by the trustee and the amount of remuneration sought by him Control of trustee by Official Assignee39 mdash(1) The Official Assignee shall take cognizance of the conduct of a trustee in the administration of the estate of a bankrupt (2) If the trustee does not faithfully perform his duties or duly observe all the requirements imposed on him by this Act the rules or any other written law with respect to the performance of his duties or if any complaint is made to the Official Assignee by any creditor or bankrupt in regard thereto the Official Assignee shall inquire into the matter and take such action thereon as he may think expedient (3) The Official Assignee may mdash (a) at any time require a trustee to answer any inquiry in relation to his administration of the estate of a bankrupt and (b) also direct an investigation to be made of the books and vouchers of the trustee (4) It shall be the duty of the trustee mdash (a) to furnish the Official Assignee with such information (b) to produce to the Official Assignee and permit inspection by the Official Assignee of such books papers and other records and

(c) to give the Official Assignee such other assistance as the Official Assignee may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy (5) The Official Assignee may having regard to the results of any inquiry or investigation made under this section apply to the court for the removal of the trustee

Jurisdiction of the Court to hear bankruptcy petitionPursuant to s3 of the Bankruptcy Act a bankruptcy petition will be heard by the HC- first by the Registrar- then on appeal to a judge in chambers- this is necessitated because of the drastic change repercussion of granting of bankruptcy order

High Court to be the court having jurisdiction in bankruptcy3 Subject to any other written law the High Court shall be the court having jurisdiction in bankruptcy under this Act

WHO MAY PRESENT BANKRUPTCY PETITION- Section 57 Bankruptcy Act - Persons who may present creditorrsquos petition (includes joint petition by 2 or

more creditors) Costs involved in presenting this Stimes diff to recover 2 or more creditors may decide to put jt petition therefore less common more common ndash one creditor (main )doing all the work and other creditors turning up to give

moral support (not monetary)

- Section 58 Bankruptcy Act - Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors etc must also be filed together with the petition)

Someone filing on his own ndash he has to provide all these documents upfront

CREDITORrsquoS PETITION- Section 57 Bankruptcy Act- S57 BA Persons who may present creditorrsquos petition (includes joint petition by 2 or more creditors)- S58 BA Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors

etc must also be filed)- May be presented by

- one of the debtorrsquos creditors [s57(1)(a)(i)] or- jointly be more than one of them[s57(1)(a)(i)] or- the nominee supervising the implementation of the voluntary arrangement proposed by the

debtor [s57(1)(a)(ii)] not tt common bu in event tt bankruptcy act allows for vol arrangement - debtor may say want to

pay up and arrangements may be set up and nominee then supervises agreement- NB Debtor may be an individual or a firm comprising one or more partners [see s57(1)(b)]

ldquoVoluntary arrangementrdquo found in Part V of the BA this is technically not a bankruptcy but before the stage of bankruptcy- where a debtor is of the opinion that the creditors are pushing him too hard and does not want to be a

bankrupt can rely on the procedure of Part V to have a payment obligations set out- this requires the consent of ALL the creditors in general meeting where nominee will be nominated- if the debtor runs foul of the conditions of payment then the nominee can present the petition - see above

Administrative matters relating to the Creditorrsquos petition- bullA creditorrsquos petition must be in the prescribed form (Form 2-Rule 99)

Form of creditorrsquos bankruptcy application99 mdash(1) Every creditorrsquos bankruptcy application shall be made in Form 2 (2) For the purposes of such an application and all proceedings thereunder mdash

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

Prima facie rule of OA as trustee may be varied - When a debtor is made a bankrupt by the Court the Official Assignee will administer his affairs in

bankruptcy unless the petitioner requests that a private trustee be appointed in place of the Official Assignee (Section 33)

o (latter rare usu occurs when debtor has a lot of overseas assets so want private trustee But this is very expensive

Appointment of person other than Official Assignee as trustee in bankruptcy33 mdash(1) The court may mdash (a) on making a bankruptcy order and (b) on the application of the creditor who applied for the bankruptcy order appoint a person other than the Official Assignee to be the trustee of the bankruptrsquos estate (2) The official name of the trustee shall be mdash (a) ldquothe Trustee of the estate of (name of bankrupt) a Bankruptrdquo or (b) ldquothe Trustee in Bankruptcy of (name of bankrupt) a Bankruptrdquo

Qualifications of a Trustee in Bankruptcy - s34- 1048729 A private trustee can be either a certified Public Accountant or a Solicitor or any person as prescribed by

the Minister (Section 34)- In addition must not be a person who has been convicted for a crime of dishonesty punishable with

imprisonment of more than 3 months [s34 - BA] - Petitioning creditors must obtin consent of person to be appted as trustee- S35 ndash private trustee reqd to furnish security to satisfaction of fofical assignee before commencing to act

failure to comply is offence punishable on conviction by fine not exceeding 10000

Qualifications for appointment as trustee34 No person shall be appointed as a trustee in bankruptcy unless he satisfies the court that mdash (a) he is mdash (i) registered as a public accountant under the Accountants Act (Cap 2A) (ii) an advocate and solicitor or (iii) such person as the Minister may by order published in the Gazette prescribe and (b) he has not been convicted of an offence involving fraud or dishonesty punishable on conviction by imprisonment for 3 months or more and he has consented in writing to being appointed as a trustee

- S361 ndash private trustee to have fn and duties and ex powers of official assignee- Powers include

Delegation of powers and fn by official trustee s19 Power to administer oaths s24 Power to seize bankruptrsquos assets s108 Power to appt special manager s113 Power to impound bankruptsrsquo passports s116 Discharge of bankrupt[ buy certi of officval assignee s125 Power to annul bankruptcy order by cert of annulment where creditor has approved debt settm

proposal by special resoln s95A Powwr to annul bankruptcy order by cert of annulment when bankrupt has paid debts of

creditors in full s123A Use of insolvency assistance fund s165

General functions duties and powers of trustee36 mdash(1) Subject to subsection (3) and section 39 a trustee shall mdash (a) have all the functions and duties of the Official Assignee in relation to the conduct of a bankrupt and the administration of his estate as provided in this Act and (b) exercise all the powers of the Official Assignee (2) Any reference in this Act or the rules to the Official Assignee shall unless the context otherwise requires include a reference to a trustee (3) Sections 19 24 95A 108 113 116 123A 125 and 165 shall not apply to a trustee and section 112 (a) (c) (f) (h) and (i) shall not apply to a trustee except with the consent of the court the creditorsrsquo committee or if there is no creditorsrsquo committee the Official Assignee

- Powers of official assignee which x apply to private trustee except with consent of court creditorsrsquo committee or official assignee or official assignee (where no creditorsrsquo committee) ndash

o S112a ndash carrying on business of bankrupto S112c ndash employing advocate and solicitor for legal proceedings or business purpose o S112f ndash referring of disputes to arbitration or compromising of debtso S112h ndash compromising of claims in relation to bankruptrsquos propertyo S112i ndash dividing property amongst creditors in existing form without first realizing it

- Section 38 ndash scheme for determination of trusteersquos remuneration- S39 ndash subj private trustee to control of official assignee who may apply to court for removal of trustee based

on investigation made under section

General powers of Official Assignee112 The Official Assignee may exercise any of the following powers (a) carry on any business of the bankrupt so far as is necessary for winding it up beneficially (b) bring institute or defend any action or legal proceedings relating to the property of the bankrupt (c) employ an advocate and solicitor to take any proceedings or do any business (d) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security or otherwise as he thinks fit (e) mortgage or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts (f) refer any dispute to arbitration or compromise all debts claims and liabilities whether present or future certain or contingent liquidated or unliquidated subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt on the receipt of such sums payable at such times and generally on such terms as are agreed on (g) make such compromise or other arrangement as is thought expedient with creditors or persons claiming to be creditors in respect of any debts provable under the bankruptcy (h) make such compromise or other arrangement as is thought expedient with respect to any claim arising out of or incidental to the property of the bankrupt made or capable of being made on the Official Assignee by any person or by the Official Assignee on any person and (i) divide in its existing form amongst the creditors according to its estimated value any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold Remuneration of trustee38 mdash(1) A trustee shall be entitled to receive such salary or remuneration as is determined in the following manner (a) by agreement between the trustee and the creditorsrsquo committee if any (b) failing any agreement with the creditorsrsquo committee or where there is no such committee by a special resolution of the creditors whose debts have been admitted for the purpose of voting and who are present in person or by proxy and voting at a meeting to be convened by the trustee by a notice to each creditor in accordance with subsection (2) or (c) failing a determination in the manner referred to in paragraph (a) or (b) by the court (2) The trustee shall attach to every notice under subsection (1) (b) a statement of all receipts and expenditure by the trustee and the amount of remuneration sought by him Control of trustee by Official Assignee39 mdash(1) The Official Assignee shall take cognizance of the conduct of a trustee in the administration of the estate of a bankrupt (2) If the trustee does not faithfully perform his duties or duly observe all the requirements imposed on him by this Act the rules or any other written law with respect to the performance of his duties or if any complaint is made to the Official Assignee by any creditor or bankrupt in regard thereto the Official Assignee shall inquire into the matter and take such action thereon as he may think expedient (3) The Official Assignee may mdash (a) at any time require a trustee to answer any inquiry in relation to his administration of the estate of a bankrupt and (b) also direct an investigation to be made of the books and vouchers of the trustee (4) It shall be the duty of the trustee mdash (a) to furnish the Official Assignee with such information (b) to produce to the Official Assignee and permit inspection by the Official Assignee of such books papers and other records and

(c) to give the Official Assignee such other assistance as the Official Assignee may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy (5) The Official Assignee may having regard to the results of any inquiry or investigation made under this section apply to the court for the removal of the trustee

Jurisdiction of the Court to hear bankruptcy petitionPursuant to s3 of the Bankruptcy Act a bankruptcy petition will be heard by the HC- first by the Registrar- then on appeal to a judge in chambers- this is necessitated because of the drastic change repercussion of granting of bankruptcy order

High Court to be the court having jurisdiction in bankruptcy3 Subject to any other written law the High Court shall be the court having jurisdiction in bankruptcy under this Act

WHO MAY PRESENT BANKRUPTCY PETITION- Section 57 Bankruptcy Act - Persons who may present creditorrsquos petition (includes joint petition by 2 or

more creditors) Costs involved in presenting this Stimes diff to recover 2 or more creditors may decide to put jt petition therefore less common more common ndash one creditor (main )doing all the work and other creditors turning up to give

moral support (not monetary)

- Section 58 Bankruptcy Act - Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors etc must also be filed together with the petition)

Someone filing on his own ndash he has to provide all these documents upfront

CREDITORrsquoS PETITION- Section 57 Bankruptcy Act- S57 BA Persons who may present creditorrsquos petition (includes joint petition by 2 or more creditors)- S58 BA Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors

etc must also be filed)- May be presented by

- one of the debtorrsquos creditors [s57(1)(a)(i)] or- jointly be more than one of them[s57(1)(a)(i)] or- the nominee supervising the implementation of the voluntary arrangement proposed by the

debtor [s57(1)(a)(ii)] not tt common bu in event tt bankruptcy act allows for vol arrangement - debtor may say want to

pay up and arrangements may be set up and nominee then supervises agreement- NB Debtor may be an individual or a firm comprising one or more partners [see s57(1)(b)]

ldquoVoluntary arrangementrdquo found in Part V of the BA this is technically not a bankruptcy but before the stage of bankruptcy- where a debtor is of the opinion that the creditors are pushing him too hard and does not want to be a

bankrupt can rely on the procedure of Part V to have a payment obligations set out- this requires the consent of ALL the creditors in general meeting where nominee will be nominated- if the debtor runs foul of the conditions of payment then the nominee can present the petition - see above

Administrative matters relating to the Creditorrsquos petition- bullA creditorrsquos petition must be in the prescribed form (Form 2-Rule 99)

Form of creditorrsquos bankruptcy application99 mdash(1) Every creditorrsquos bankruptcy application shall be made in Form 2 (2) For the purposes of such an application and all proceedings thereunder mdash

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

- Powers of official assignee which x apply to private trustee except with consent of court creditorsrsquo committee or official assignee or official assignee (where no creditorsrsquo committee) ndash

o S112a ndash carrying on business of bankrupto S112c ndash employing advocate and solicitor for legal proceedings or business purpose o S112f ndash referring of disputes to arbitration or compromising of debtso S112h ndash compromising of claims in relation to bankruptrsquos propertyo S112i ndash dividing property amongst creditors in existing form without first realizing it

- Section 38 ndash scheme for determination of trusteersquos remuneration- S39 ndash subj private trustee to control of official assignee who may apply to court for removal of trustee based

on investigation made under section

General powers of Official Assignee112 The Official Assignee may exercise any of the following powers (a) carry on any business of the bankrupt so far as is necessary for winding it up beneficially (b) bring institute or defend any action or legal proceedings relating to the property of the bankrupt (c) employ an advocate and solicitor to take any proceedings or do any business (d) accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security or otherwise as he thinks fit (e) mortgage or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts (f) refer any dispute to arbitration or compromise all debts claims and liabilities whether present or future certain or contingent liquidated or unliquidated subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt on the receipt of such sums payable at such times and generally on such terms as are agreed on (g) make such compromise or other arrangement as is thought expedient with creditors or persons claiming to be creditors in respect of any debts provable under the bankruptcy (h) make such compromise or other arrangement as is thought expedient with respect to any claim arising out of or incidental to the property of the bankrupt made or capable of being made on the Official Assignee by any person or by the Official Assignee on any person and (i) divide in its existing form amongst the creditors according to its estimated value any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold Remuneration of trustee38 mdash(1) A trustee shall be entitled to receive such salary or remuneration as is determined in the following manner (a) by agreement between the trustee and the creditorsrsquo committee if any (b) failing any agreement with the creditorsrsquo committee or where there is no such committee by a special resolution of the creditors whose debts have been admitted for the purpose of voting and who are present in person or by proxy and voting at a meeting to be convened by the trustee by a notice to each creditor in accordance with subsection (2) or (c) failing a determination in the manner referred to in paragraph (a) or (b) by the court (2) The trustee shall attach to every notice under subsection (1) (b) a statement of all receipts and expenditure by the trustee and the amount of remuneration sought by him Control of trustee by Official Assignee39 mdash(1) The Official Assignee shall take cognizance of the conduct of a trustee in the administration of the estate of a bankrupt (2) If the trustee does not faithfully perform his duties or duly observe all the requirements imposed on him by this Act the rules or any other written law with respect to the performance of his duties or if any complaint is made to the Official Assignee by any creditor or bankrupt in regard thereto the Official Assignee shall inquire into the matter and take such action thereon as he may think expedient (3) The Official Assignee may mdash (a) at any time require a trustee to answer any inquiry in relation to his administration of the estate of a bankrupt and (b) also direct an investigation to be made of the books and vouchers of the trustee (4) It shall be the duty of the trustee mdash (a) to furnish the Official Assignee with such information (b) to produce to the Official Assignee and permit inspection by the Official Assignee of such books papers and other records and

(c) to give the Official Assignee such other assistance as the Official Assignee may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy (5) The Official Assignee may having regard to the results of any inquiry or investigation made under this section apply to the court for the removal of the trustee

Jurisdiction of the Court to hear bankruptcy petitionPursuant to s3 of the Bankruptcy Act a bankruptcy petition will be heard by the HC- first by the Registrar- then on appeal to a judge in chambers- this is necessitated because of the drastic change repercussion of granting of bankruptcy order

High Court to be the court having jurisdiction in bankruptcy3 Subject to any other written law the High Court shall be the court having jurisdiction in bankruptcy under this Act

WHO MAY PRESENT BANKRUPTCY PETITION- Section 57 Bankruptcy Act - Persons who may present creditorrsquos petition (includes joint petition by 2 or

more creditors) Costs involved in presenting this Stimes diff to recover 2 or more creditors may decide to put jt petition therefore less common more common ndash one creditor (main )doing all the work and other creditors turning up to give

moral support (not monetary)

- Section 58 Bankruptcy Act - Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors etc must also be filed together with the petition)

Someone filing on his own ndash he has to provide all these documents upfront

CREDITORrsquoS PETITION- Section 57 Bankruptcy Act- S57 BA Persons who may present creditorrsquos petition (includes joint petition by 2 or more creditors)- S58 BA Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors

etc must also be filed)- May be presented by

- one of the debtorrsquos creditors [s57(1)(a)(i)] or- jointly be more than one of them[s57(1)(a)(i)] or- the nominee supervising the implementation of the voluntary arrangement proposed by the

debtor [s57(1)(a)(ii)] not tt common bu in event tt bankruptcy act allows for vol arrangement - debtor may say want to

pay up and arrangements may be set up and nominee then supervises agreement- NB Debtor may be an individual or a firm comprising one or more partners [see s57(1)(b)]

ldquoVoluntary arrangementrdquo found in Part V of the BA this is technically not a bankruptcy but before the stage of bankruptcy- where a debtor is of the opinion that the creditors are pushing him too hard and does not want to be a

bankrupt can rely on the procedure of Part V to have a payment obligations set out- this requires the consent of ALL the creditors in general meeting where nominee will be nominated- if the debtor runs foul of the conditions of payment then the nominee can present the petition - see above

Administrative matters relating to the Creditorrsquos petition- bullA creditorrsquos petition must be in the prescribed form (Form 2-Rule 99)

Form of creditorrsquos bankruptcy application99 mdash(1) Every creditorrsquos bankruptcy application shall be made in Form 2 (2) For the purposes of such an application and all proceedings thereunder mdash

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(c) to give the Official Assignee such other assistance as the Official Assignee may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy (5) The Official Assignee may having regard to the results of any inquiry or investigation made under this section apply to the court for the removal of the trustee

Jurisdiction of the Court to hear bankruptcy petitionPursuant to s3 of the Bankruptcy Act a bankruptcy petition will be heard by the HC- first by the Registrar- then on appeal to a judge in chambers- this is necessitated because of the drastic change repercussion of granting of bankruptcy order

High Court to be the court having jurisdiction in bankruptcy3 Subject to any other written law the High Court shall be the court having jurisdiction in bankruptcy under this Act

WHO MAY PRESENT BANKRUPTCY PETITION- Section 57 Bankruptcy Act - Persons who may present creditorrsquos petition (includes joint petition by 2 or

more creditors) Costs involved in presenting this Stimes diff to recover 2 or more creditors may decide to put jt petition therefore less common more common ndash one creditor (main )doing all the work and other creditors turning up to give

moral support (not monetary)

- Section 58 Bankruptcy Act - Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors etc must also be filed together with the petition)

Someone filing on his own ndash he has to provide all these documents upfront

CREDITORrsquoS PETITION- Section 57 Bankruptcy Act- S57 BA Persons who may present creditorrsquos petition (includes joint petition by 2 or more creditors)- S58 BA Persons who may present debtorrsquos petition (Statement of Affairs of his assets liabilities creditors

etc must also be filed)- May be presented by

- one of the debtorrsquos creditors [s57(1)(a)(i)] or- jointly be more than one of them[s57(1)(a)(i)] or- the nominee supervising the implementation of the voluntary arrangement proposed by the

debtor [s57(1)(a)(ii)] not tt common bu in event tt bankruptcy act allows for vol arrangement - debtor may say want to

pay up and arrangements may be set up and nominee then supervises agreement- NB Debtor may be an individual or a firm comprising one or more partners [see s57(1)(b)]

ldquoVoluntary arrangementrdquo found in Part V of the BA this is technically not a bankruptcy but before the stage of bankruptcy- where a debtor is of the opinion that the creditors are pushing him too hard and does not want to be a

bankrupt can rely on the procedure of Part V to have a payment obligations set out- this requires the consent of ALL the creditors in general meeting where nominee will be nominated- if the debtor runs foul of the conditions of payment then the nominee can present the petition - see above

Administrative matters relating to the Creditorrsquos petition- bullA creditorrsquos petition must be in the prescribed form (Form 2-Rule 99)

Form of creditorrsquos bankruptcy application99 mdash(1) Every creditorrsquos bankruptcy application shall be made in Form 2 (2) For the purposes of such an application and all proceedings thereunder mdash

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(a) the plaintiff shall be the creditor making the bankruptcy application and (b) the defendant shall be the debtor in respect of whom the bankruptcy application is made

- bullAffidavit of Truth of Statements in Bankruptcy Petition (Form 34 - Rule 106) ndash affidavit verifying application done by creditor or someone supervising bankruptcy For affidavit verifying truthhellip have to be filed within 4 days from the filing of petition in the

HC Cannot affirm this affidavit before filing of the petition has to be AFTER the filing of the

petition

Form of affidavit106 mdash(1) The affidavit supporting a creditorrsquos bankruptcy application shall be in Form 3 or 4 as appropriate and shall be filed at the same time as the creditors bankruptcy application (2) The affidavit shall be made by the applicant creditor or by another person on his behalf

- bullAffidavit of Service of Statutory Demand exhibiting the Statutory Demand (Rule 102) if the petition is presented based on statutory demand then the petition to be accompanies by

the demand and a affidavit of service verifying service of the LD A statutory demand serves as evidence of inability to pay debt Therefore it must be served

personally (if not seek leave of court to effect substituted service) Check that all particulars are correct

Bankruptcy application based on statutory demand102 mdash(1) Where the creditorrsquos bankruptcy application is based on a statutory demand the affidavit supporting the application shall state the date and manner of service of the statutory demand and that to the best of the creditorrsquos knowledge and belief the demand has neither been complied with nor set aside and that no application to set it aside is pending (2) The application shall not be made if the statutory demand was served more than 4 months before the date of filing of the application

- bullDeposit of S$1600 (Rule 105) This is to off-set the administrative charges of the OA deposited to allow OA to do sth abt bankruptcy case must have some money to start off administration

Deposit payable to Official Assignee105 mdash(1) A creditor making a bankruptcy application shall file 2 copies of the application and the supporting affidavit in court inclusive of the copy to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies of the creditorrsquos application and the supporting affidavit under paragraph (1) the application and affidavit shall be deemed to have been served on the Official Assignee (3) Where a creditorrsquos bankruptcy application has been filed under paragraph (1) the Official Assignee may from time to time require the applicant creditor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the application

- bullAffidavit of Service of Bankruptcy Petition (Rule 109 amp Section 65(1)(b)) This is because the section 65(1)(b) provides that the Court shall not on hearing a creditorrsquos

petition make BO unless satisfied that if the debtor does not appear at the hearing the petition has been duly served on him

See Rule 109 Bankruptcy must be served personally on the debtor It is not good service to simply leave it at his last known address If you are not able to effect personal service then rule 110 allows substituted

servicehellip but courtrsquos leave must have been obtained Have to convince the Registrar that the substituted service is sufficient to bring the

petition to the notice of the debtor Can stick on door of last known address

Can put in newspapers must also be a paper that the debtor reads eg Malay debtorhellip will usually print it in the Malay papers and the Straits Times

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

Personal service on individual debtor109 Subject to rule 111 a creditorrsquos bankruptcy application and its supporting affidavit shall be served personally on the debtor at the same time by an officer of the court or by the applicant creditor or his solicitor or by a person in their employment and service shall be effected by delivering a sealed copy of the application together with its supporting affidavit to the debtor Personal service on firm110 Subject to rule 111 where the creditorrsquos bankruptcy application is against a firm personal service of the application shall be deemed to have been effected on all the partners in the firm if the application and its supporting affidavit are served together at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat Substituted service111 mdash(1) If the court is satisfied by affidavit or other evidence on oath that prompt personal service cannot be effected because the debtor is keeping out of the way to avoid service of a creditorrsquos bankruptcy application or for any other cause the court may order substituted service to be effected in such manner as it thinks fit (2) If the debtor is not in Singapore the court may order service to be made within such time and in such manner and form as it thinks fit (3) Where an order for substituted service has been carried out the bankruptcy application shall be deemed to have been duly served on the debtor

- bullAffidavit of Non-Satisfaction of Debt (Section 65(1)(a)) This is because the section provides that the Court shall not on hearing a creditorrsquos petition

make BO unless satisfied that the debts in respect of which the petition has neither been paid secured nor compounded for

==gt in practice it is better to have both affidavit of service and affidavit of non-satisfaction because you do not know whether the debtor may turn out in court

Proceedings on creditorrsquos bankruptcy application65 mdash(1) The court hearing a creditorrsquos bankruptcy application shall not make a bankruptcy order thereon unless it is satisfied that mdash (a) the debt or any one of the debts in respect of which the application is made is a debt which having been payable at the date of the application has neither been paid nor secured or compounded for and (b) where the debtor does not appear at the hearing the application has been duly served on him

- ie four affidavits to file

Objective 4 ndash encourage creditors to take greater interest in bankruptcy administration

a) trustee in bankruptcy- creditors can apply to court for private trustee to be aptped to administer bnkrptcy estate - part IV

o see lsit of such persons s34- s33 ndash analogous role to private liquidator in companies liquidation cases

b) creditorsrsquo committee- creditors can appt creditorsrsquo committee comprising up to 3 creditors to advise OA on matters relating to

admin of property

DEBTORrsquoS PETITION (self petition)- Section 58 Bankruptcy Act

bull Debtor may be an individual the debtor may present a petition against himself bull Debtor may also be a firm all partners of the firm or a majority of them who are residing in

Singapore may present a petition against their firm if private limited then goes under diff set of rules (winding up) under companies

act Note

58 mdash(1) Subject to this Part a debtorrsquos petition may be presented mdash (a) against an individual debtor by the debtor himself or

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(b) against a firm by all the partners in the firm or by a majority of such partners who are residing in Singapore at the time of the presentation of the petition

Difference between creditorrsquos and debtors petition - Statement of Affairs has to be filed - In this Statement of Affairs it is for the debtor to tell the court what are his assets who are his creditors

Nomineersquos report on debtorrsquos proposal49 mdash(1) Where an interim order has been made the nominee shall before the order ceases to have effect submit a report to the court stating mdash (a) whether in his opinion a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal and (b) if in his opinion such a meeting should be summoned the date on which and the time and place at which he proposes the meeting should be held (2) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee mdash (a) a document setting out the terms of the voluntary arrangement which the debtor is proposing and (b) where the debtor is an individual a statement of his affairs containing mdash (i) such particulars of his assets creditors debts and other liabilities as may be prescribed and (ii) such other information as may be prescribed or (c) where the debtor is a firm a statement of its affairs containing mdash (i) such particulars of the assets creditors debts and other liabilities of the firm and of each partner therein as may be prescribed and (ii) such other information as may be prescribed (3) Where the nominee has failed to submit the report required by this section within the time given the court may on an application made by the debtor do one or both of the following (a) direct that the nominee shall be replaced by another person qualified to act as a nominee (b) direct that the interim order shall continue or if it has ceased to have effect be renewed for such further period as the court may think fit (4) The court may on the application of the nominee extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare his report (5) If the court is satisfied on receiving the nomineersquos report that a meeting of the debtorrsquos creditors should be summoned to consider the debtorrsquos proposal the court shall direct that the period for which the interim order has effect shall be extended for such further period as it may think fit for the purpose of enabling the debtorrsquos proposal to be considered by the debtorrsquos creditors in accordance with the following provisions of this Part (6) The court may discharge the interim order if it is satisfied on the application of the nominee mdash (a) that the debtor has failed to comply with subsection (2) or (b) that for any other reason it would be inappropriate for a meeting of the debtorrsquos creditors to be summoned to consider the debtorrsquos proposal

- Cf in creditorsrsquo petition where this does not have to be filed because once the court makes bankruptcy order the debtor will have to disclose all his assets

- This is an essential procedure because the court does not want people to hide behind bankruptcy

5 requirements for self petition- A debtorrsquos petition must be in the prescribed form (Form 9 - Rule 134)

Form of bankruptcy application134 mdash(1) A debtorrsquos bankruptcy application shall be made in Form 9 and the affidavit supporting the application shall state mdash (a) his name as it appears in his identity card or passport (b) the number of his identity card or passport (c) any other name or names by which he is or was known or by which he carries or has carried on any business (d) his residential address (e) his occupation and monthly income and (f) the nature of his business and the address at which he carries on such business and whether he carries on the business alone or with others (2) Where a debtorrsquos bankruptcy application is filed by a firm in the firmrsquos name the affidavit supporting the application shall state mdash

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(a) the name the number of the identity card or passport the residential address the occupation and the monthly income of each of the partners in the firm (b) whether all the partners concur in the filing of the application (c) the names of the partners who do not concur in the filing of the application (d) the nature of the business of the firm (e) the number of the certificate of the registration of the firm under the Business Registration Act (Cap 32) and (f) where any of the partners in the firm carries on any business separately the nature of such business and the address at which it is carried on and whether he carries on the business alone or with others (3) Where the bankruptcy application is filed by an individual debtor the full title of the proceedings shall be determined by the particulars of the debtor specified in paragraph (1) (a) (b) and (c) (4) Where the bankruptcy application is filed by a firm in the firmrsquos name the full title of the proceedings shall include the name of the firm as well as the names and numbers of the identity cards or passports of all the partners in the firm (5) The debtor shall explain in his affidavit how the conditions and grounds specified in sections 60 and 61 respectively of the Act for the filing of a bankruptcy application have been satisfied- Affidavit of Truth of Statements in Bankruptcy Petition (Form 10 - Rule 136)

Verification of application136 The affidavit supporting a debtorrsquos bankruptcy application shall be in Form 10 - Filing of Statement of Affairs amp Affidavit verifying Statement of Affairs (Form 1112 - Rule 137)

Form 11 ndash Statement of AffairsForm 12 ndash Affidavit Verifying Statement of Affairs

Statement of affairs137 mdash(1) A debtorrsquos bankruptcy application shall be filed in court together with a statement of affairs in Form 11 (2) The statement of affairs shall be verified by an affidavit in Form 12

- Deposit of S$1600 (Rule 138)

Procedure for filing of debtorrsquos bankruptcy application138 mdash(1) The debtor who files his own bankruptcy application shall file 2 copies each of the bankruptcy application the supporting affidavit and the statement of affairs in court inclusive of the copies to be served on the Official Assignee together with the deposit payable to the Official Assignee of such sums as are prescribed by the Bankruptcy (Fees) Rules (R 3) (2) Upon the filing of 2 copies each of the debtorrsquos bankruptcy application affidavit and statement of affairs under paragraph (1) the application affidavit and statement of affairs shall be deemed to have been served on the Official Assignee (3) Where a debtorrsquos bankruptcy application affidavit and statement of affairs have been filed under paragraph (1) the Official Assignee may from time to time require the debtor to deposit with the Official Assignee such further sums as may be required by the Official Assignee whether before or after the making of the bankruptcy order to cover the fees and expenses incurred by the Official Assignee in connection with the debtorrsquos bankruptcy application (4) Where the debtor is a wage-earner the deposit payable under paragraph (1) may be reduced or waived at the discretion of the Official Assignee

- Service of Bankruptcy Petition amp Statement of Affairs (Rules 139 amp 140) ndash msut show tt has been served on the requisite parties

- Have to serve on the relevant partieso Eg when at the date of debtorrsquos petition there is a voluntary arrangement in force hellip and he

feels that he cannot pay as per agreedo The debtor can file against himself but must serve it on the nominees

Service of debtorrsquos bankruptcy application on nominee supervising voluntary arrangement and partners of debtor139 mdash(1) Where the debtorrsquos bankruptcy application is filed by the debtor at a time when a voluntary arrangement under Part V of the Act is in force between himself and his creditors he shall serve a copy of the bankruptcy application affidavit and statement of affairs on the nominee supervising the arrangement

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(2) Where the debtorrsquos bankruptcy application is filed against a firm by some of the partners in the firm a copy of the application affidavit and statement of affairs shall be served on those partners who did not consent to or participate in the filing of the application Hearing of debtorrsquos bankruptcy application140 The court shall not hear the debtorrsquos bankruptcy application unless it is satisfied that the bankruptcy application affidavit and statement of affairs have been duly served on the parties referred to in rule 139 and any of such parties may appear at the hearing and be heard

- Another exampleo 3 partners in a firmhellip 2 of which agree to file for petition against themselves but one does not

agree hence have to serve on the remaining person

CONDITIONS FOR PRESENTATION OF BANKRUPTCY PETITIONS - SECTION 60

Jurisdiction of HC [s60 BA]Conditions to be satisfied in respect of debtor60 mdash(1) No bankruptcy application shall be made to the court under section 57 (1) (a) or 58 (1) (a) against an individual debtor unless the debtor mdash (a) is domiciled in Singapore (b) has property in Singapore or (c) has at any time within the period of one year immediately preceding the date of the making of the application mdash

(i) been ordinarily resident or has had a place of residence in Singapore or (ii) carried on business in Singapore

(2) No bankruptcy application shall be made to the court under section 57 (1) (b) or 58 (1) (b) against a firm unless mdash (a) at least one of the partners in the firm mdash

(i) is domiciled in Singapore (ii) has property in Singapore or (iii) has at any time within the period of one year immediately preceding the date of the making of the application been ordinarily resident or has had a place of residence in Singapore or

(b) the firm has at any time within the period of one year immediately preceding the date of the making of the application carried on business in Singapore (3) The reference in subsection (1) (c) (ii) to an individual carrying on business in Singapore shall include mdash (a) the carrying on of business in Singapore by a firm in which the individual is a partner and (b) the carrying on of business in Singapore by an agent or manager for the individual or for such a firm

Before the HC has jurisdiction to hear and grant bankruptcy petitions either - 1048729 The debtor is domiciled in Singapore or- 1048729 The debtor has property in Singapore ndash make sure or- 1048729 The debtor has within one year before the date of presentation of petition

been ordinarily resident or has had place of residence in Singapore or no definition of ldquoordinary residentrdquo in the BA therefore can go to other Acts (eg

Income Tax Act for purposes of whether a foreigner is subjected to Income Tax Act) carried on business in Singapore ndash ie some sort of nexus in this jurisdiction

this is further elaborated in s60(3)

- where debt occurred outside sg judgement shld be enforceable in sg

Algemene Bank Nederland v Loo Choon Yow 1989 2 MLJ 258Facts The petitioning creditor had obtained judgment against the judgment debtor but following the latter`s failure to pay the debt a bankruptcy notice was served by the petitioning creditor against the judgment debtor The bankruptcy petition was then filed Para 2 of this petition stated that the judgment debtor had for the greater part of six months preceding the presentation of the petition resided in Singapore within the jurisdiction of the court The bankruptcy notice and petition were both served on the judgment debtor by way of substituted service through advertisement in the newspapers LCB the judgment debtor`s brother then filed an affidavit in which he deposed that he had personal knowledge that the judgment debtor was not residing in Singapore since late 1985 that he had married a Taiwanese lady and since 1985 had been domiciled and residing in Taiwan and did not own

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

any dwelling house or have a place of business in Singapore Another person CCK an accountant who said that he had handled the judgment debtor`s financial affairs since the judgment debtor had left Singapore also filed an affidavit confirming the affidavit of LCB Holdings Held granting the petition (1)The burden was on the petitioning creditor to satisfy the court that the judgment debtor was a debtor for the purposes of s 3 of the Bankruptcy Act but this burden had been discharged by reference to the judgment debtor`s passport and to another exhibit (a certificate issued by the Trade Mission of the Republic of China in Singapore) produced by the judgment debtor which showed that he was born in Singapore and that he was a Singapore citizen (2)The affidavits of the judgment debtor`s witnesses were rejected on the grounds that they were hearsay Whether the judgment debtor had changed his domicile was a matter within the personal knowledge of himself so the witnesses could not say that they had personal knowledge of this matter (3)As regards the statement that the judgment debtor had married a Taiwanese lady had a son and purchased a house in Taiwan with the intention of residing there permanently no documentary evidence was produced to show any of these facts (4)The judgment debtor`s passport showed that he had travelled extensively to many countries from 1985 to 1988 But frequency of travel does not prove a change of domicile nor did the judgment debtor himself so allege (5)The judgment debt was not denied the petitioning creditor had discharged the burden or proving that the judgment debtor was a debtor at the time the bankruptcy notice was served on him and judgment debtor had failed to adduce evidence that he had changed his domicile at the relevant time a receiving order and an adjudicating order was therefore made against the judgment debtor

er brauch (a debtor) 1978 1 AER 1004

Objective 2 ndash simplify streamline and update bankruptcy proceedings

a) Single grd of inability to pay replacing archaic concept of bankruptcy act

GROUNDS FOR PETITION - SECTION 61

61 mdash(1) No bankruptcy application shall be presented to the court in respect of any debt or debts unless at the time the application is made mdash (a) the amount of the debt or the aggregate amount of the debts is not less than $10000 (b) the debt or each of the debts is for a liquidated sum payable to the applicant creditor immediately (c) the debtor is unable to pay the debt or each of the debts and (d) where the debt or each of the debts is incurred outside Singapore such debt is payable by the debtor to the applicant creditor by virtue of a judgment or award which is enforceable by execution in Singapore (2) The Minister may by order published in the Gazette amend subsection (1) (a) by substituting a different sum for the sum for the time being specified therein

- No bankruptcy petition shall be presented unless at the time the petition is presented

1 1048729 The debt is not less than S$10000 ndash if less than this donrsquot bother wont fulfil the conds for bankrupcy Re JBJ (2000) 3 SLR 207

there may be situations where there is a joint petition by several creditorshellip who but themselves donrsquot make up $10000

however if together they meet the threshold and the collecting debt is more than $10000 then they can present the petition

2 1048729 The debt is for a liquidated sum payable immediately to the petitioning creditor ndash must quantify the sum

3 1048617 The debtor is unable to pay the debt ndash n6te that in practice debtor likey to be able to pay up with time note circumstances of the case it depends (not examinable but in practice a flexible area) and (actual inability to pay)

4 1048729 If the debt is incurred outside Singapore such debt is payable as a result of judgment or award which is enforceable by execution in Singapore ndash make sure that can enforce in sg Find in civil procedure how to do so If cannt execute in sg then difficulty filing for bankruptcy

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207FactsTwo bankruptcy petitions were filed against the debtor in respect of his failure to pay the sums under two judgment debts Both petitions were heard together before an assistant registrar At the first hearing the court was informed of an instalment plan which allowed the debtor to discharge his debt by instalments Under the plan it was agreed that the petitions would be filed but the hearings would be adjourned until the debtorrsquos debts were fully discharged In the event of default by the debtor the petitioners were entitled at their discretion to terminate the plan and proceed with their respective petitions Accordingly the petitions were adjourned from month to month until at one of the hearings the petitions were ordered to be withdrawn subject to the petitionersrsquo right to restore them for hearing in the event of default by the debtorThe debtor defaulted in one of the instalment payments and consequently the two petitions were restored for hearing At the hearing the debtorrsquos solicitor applied for the matters to be stayed on the ground that full payment of the balance due could be made soon It was further argued that a stay was justified because under s 61 of the Bankruptcy Act (Cap 20) (ldquothe Actrdquo) a bankruptcy order could only be made where the amount of the debt was not less than $10000 whereas the respective outstanding debts were below that amount In addition before making a bankruptcy order the court had to be satisfied that the debtor was unable to pay the debts and such was not shown on the facts The petitioners objected to the stay and pointed out that the debtor had been late in all except one of the previous instalments It was argued that the $10000 minimum applied only at the time of presentation of the petitions The assistant registrar decided to make a bankruptcy order against the debtor in one of the petitions and granted leave for the other petition to be withdrawn The debtor appealed against the bankruptcy order In the course of the hearing of the appeal the debtor paid up in full the outstanding balance due to both petitioners Thus both bankruptcy petitions were withdrawn and the bankruptcy order was asked to be set asideHeld setting aside the bankruptcy order(1) The petitions as they appeared on record showed that there was no dishonesty involved in their presentation There was no intention to conceal from the court the fact that the petitioners had allowed the debtor to pay according to an instalment plan At each hearing particularly when the bankruptcy order was made the court was properly informed of the situation The petitioners had complied with all the formal requirements of the Bankruptcy Act and the Bankruptcy Rules while the debtor had not rebutted the presumption that he was unable to pay his debt(2) The debtorrsquos ability to pay must be assessed in relation to the time the petition was presented Willingness and ability to pay progressively in the future did not equate with ability to pay a debt forthwith The petitions here were both in form and in substance in compliance with s 61 of the Act and had properly invoked the presumption in s 62 (3) The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition The fact that the debt had since fallen below the statutory minimum did not constitute a ground on which the court might dismiss a petition

PRESUMPTIONS OF INABILITY TO PAY DEBTS - SECTION 62 (3 conditions)

- 1 Failure to comply with statutory demand or did not apply to Court to set aside statutory demand within 21 days of service (most common type of presumption for inability of payment of debt)

very precise ndash stat dd in prescribed form must satisfy within 21 days after which bankruptcy petition

Illustration(A) the petitioning creditor to whom the debt is owed has served the Statutory Demand on the debtor in the

prescribed manner(B) 21 days have elapsed since the service of the statutory demand(C) the debtor has neither complied with it nor applied to the court to set aside the statutory demand

- 2 or Execution issued against debtor in respect of Judgment debt remains unsatisfied in whole or in part ndash not so common a method but still used or

- 3 Debtor has left Singapore with the intention to defeat or delay or obstruct creditorrsquos recovery of debt ndash difficult to prove Must prove tt he left juris ndash evid to be adduced packing up assets and trying to abscond

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

ensure tt he doenst intend to come back Difficult to prove Unless no other choice try not to take this route

Presumption of inability to pay debts62 For the purposes of a creditorrsquos bankruptcy application a debtor shall until he proves to the contrary be presumed to be unable to pay any debt within the meaning of section 61 (1) (c) if the debt is immediately payable and mdash (a) (i) the applicant creditor to whom the debt is owed has served on him in the prescribed manner a statutory demand (ii) at least 21 days have elapsed since the statutory demand was served and (iii) the debtor has neither complied with it nor applied to the court to set it aside (b) execution issued against him in respect of a judgment debt owed to the applicant creditor has been returned unsatisfied in whole or in part or (c) he has departed from or remained outside Singapore with the intention of defeating delaying or obstructing a creditor in the recovery of the debt

PROCEDURES IN BANKRUPTCY PROCEEDINGS

b)(contd fr above) creditors can present bankruptcy application against debtors without obt judgment against them first- but creditors not to abuse this by issing stat dds for debts involv bona fide disputes- re a debtor no 32 of 1991 (no 2) 1994 BCC 524 ndash court must always be qlsert ot danger tt stat dd may be

used to put pressure on debtor to pay debt liab for which not estd by udgmenet and disputed- Philex v Golban 1993 ndash petitions founded on debts invol bona fide disputes may be categorized as abuse of

process and dismissed with costs on indemnity basis- re a company 1992 1 WLR 351 ndash recourse to bankruptcy courts not a substi to O14 procedure

c) defects in stat demand- mere technicalities x defeat proceedings ndash court will consider all circumstance and set aside stat dd only

whre substantive injustice caused to debtor

Wong Kwei Cheong v ABN-AMRO Bank NV [2002] 3 SLR 594- Facts- The appellants (lsquothe bankrsquo) issued a statutory demand (the lsquoSDrsquo) under s 62 of the Bankruptcy Act (Cap 20

2000 Ed) (the lsquoActrsquo) against the respondent (lsquoWongrsquo) for moneys allegedly due under a personal guarantee in respect of banking facilities extended by the bank

- The bank made six failed attempts to serve the SD personally on Wong either at his last known residence or at other possible addresses of his It then advertised a notice of the SD in the newspapers

- Wong then successfully applied under r 97(1) and 97(3) of the Bankruptcy Rules (Cap 20 R 1 1996 Ed) (the lsquoRulesrsquo) to have the SD set aside On the bankrsquos appeal the issue was whether the advertisement was good service of the SD and if not whether it ought to be set aside on this ground

- Held setting aside the SD and dismissing the appeal- The SD was not served on Wong in accordance with r 96 First the bank could advertise the SD under

r 96(4)(c) only if it was unable to effect substituted service in accordance with rr 96(4)(a) and 96(4)(b) because it did not know Wongrsquos last place of residence business or employment This was not so in the present case as the bank knew Wongrsquos last known residence and should have effected substituted service under rr 96(4)(a) or (b) or both Second the bank was obliged under r 96(1) to take reasonable steps to bring the SD to Wongrsquos attention As the bank knew who Wongrsquos solicitors were it should have brought the SD to his attention through them Third even if the bank was justified in effecting substituted service by advertisement under r 96(4)(c) it failed to comply with that rule as it had advertised a notice of the SD instead of the SD itself

- The court was obliged to set aside an SD under r 98(2)(b) if the debtor disputed the claim in the SD and the dispute appeared to be substantial Further it was not the bankruptcy courtrsquos function at the hearing of an application to set aside an SD to conduct a full hearing of the dispute and adjudicate on the merits of the creditorrsquos claim

- The SD was set aside First the disputes raised by Wong appeared to be substantial Second given that the court was bound under rr 108(6) and 127(c) to dismiss a petition for bankruptcy founded on an SD if the

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

SD was not served in compliance with r 96 it ought to grant an application to set aside such an SD under r 98(2)(e) Further the intention behind the Rules was to ensure mandatory compliance of the rules relating to service Hence non-compliance with r 96 could not be treated as an irregularity or a formal defect which could be cured under s 158(1) of the Act as that would negate the peremptory nature of rr 108(6) and 127(c)

- There was no statutory presumption under s 62 of the Act that Wong was unable to pay the debt This was because the SD was not served on him in accordance with r 96 which was the lsquoprescribed mannerrsquo required in s 62(a)(i)

The Straits Times Press (1975) Limited v Wong Chee Kok [1998] SGHC 77- The judgment debtor appealed against the decision of the learned Deputy Registrar dismissing his

application to set aside the statutory demand dated 31 October 1997 The Deputy Registrar also gave liberty to the judgment creditors to present their bankruptcy petition forthwith

- 2 At the appeal before me counsel for the judgment debtor relied on the sole ground that the statutory demand cannot be based on more than one debt It was not disputed that the statutory demand made under s 62 of the Bankruptcy Act (Cap 20 1996 Ed) was based on two judgment debts of principal amounts $3183629 and $481100 After adding the interest accrued on these two debts and after allowing for (a) receipts from several garnishee proceedings taken out by the judgment creditors and (b) a set-off of $5000 from an award made in favour of the judgment debtor the balance sum owing as at 31 October 1997 was $2815412 The statutory demand was based on this balance sum

- 3 The appellantrsquos counsel argued that demands for individual debts have to be in separate statutory demands because the debtor must be given a fair opportunity to answer to each of the debts It would be difficult and confusing for the debtor should he decide to challenge one debt and not challenge the others since he would not know exactly how much he would have to pay to satisfy the statutory demand in respect of those debts which he is not disputing

- I do not think that the consolidation of several debts into one statutory demand presents much of a problem for a debtor who wishes to dispute part of the consolidated debt but pay up on the undisputed remainder

- As can be seen in Rule 94 of the Bankruptcy Rules S26995 full particulars of each debt together with the accrued interest penalties and charges including the source or basis of each debt to enable the debtor to identify the debt must be provided in the statutory demand When such details are provided there should be little difficulty in determining from the statutory demand what the actual amount due for each debt is

- In the event of any difficulty the debtor can easily approach the person named in the statutory demand for the purpose of securing or compounding the debt I cannot imagine that the contact person will be reluctant to assist a debtor who is going to pay up

- Provision of such information concerning a contact person is obviously to help the debtor and I do not think the problem raised by counsel should be a sufficient basis for rendering a statutory demand invalid merely because a consolidation of debts into one statutory demand can be confusing to a debtor who wishes to pay up on a part of the debt which he does not dispute

- On the facts of this case the debtor was not disputing both judgment debts nor the correctness of the calculations in the statutory demand There was also no evidence that he tried to make payment to settle any part of the debts The potential difficulty posed by counsel did not arise at all Hence the debtor suffered no prejudice whatsoever and counsel rightly did not invite the court to exercise its discretion under Rule 98(2)(e) to set aside the statutory demand on the ground of prejudice

- 14 I do not think that the principles stated by these two old English cases are applicable any longer since our new Bankruptcy Act is modeled somewhat on the English Insolvency Act and likewise a creditorrsquos petition is no longer based on an act of bankruptcy (as was previously the case) but on a debtorrsquos inability to pay a debt or an aggregate debt of not less than $2000 to that creditor Under s 62 of the new Act a debtor shall be presumed to be unable to pay a debt if he fails to comply with or apply to set aside a statutory demand within 21 days of being served that demand

- 15 Clearly the new Bankruptcy Act (Cap 20 1996 Ed) is a major reform to our bankruptcy laws that had existed previously for many years Therefore resort to local cases prior to the new Bankruptcy Act which decided along the same lines as the older English cases may not be of much help either

- 23 I would like to quote what the Minister for Law Professor S Jayakumar had said in Parliament during the Second Reading of the Bankruptcy Bill

- there is a problem of present procedures being very cumbersome and complex The present procedures are outdated and also too technical They contribute to substantial delay in the administration of estates hellip

- hellipthe Bill streamlines and updates cumbersome complex and archaic bankruptcy procedures Sir bankruptcy proceedings bankruptcy administration and discharge from bankruptcy will be streamlined and simplified This will result in greater efficiency and lower costs For example the single ground of inability

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

to pay will replace the outmoded concept of acts of bankruptcy on which proceedings are based Furthermore a new 2-tier court process consisting of bankruptcy petition and bankruptcy order will replace the present 4 tier process of notice petition and two court orders These innovations have also been adopted by the United Kingdom

- 24 Therefore mere technicalities which existed previously for setting aside a bankruptcy notice should not simply be imported into the new bankruptcy regime for setting aside a statutory demand Due regard must be paid to the objects of the new Bankruptcy Act and whether there is evidence showing that the debtor had in fact suffered substantial prejudice or injustice by reason of those technical defects or irregularities In this case the judgment debtor had not suffered any prejudice or injustice

- 25 For the reasons given I dismissed his appeal with costs

- Debt at $10000 or more- Statutory Demand

Rules 94-98 108

Form and contents of statutory demand94 mdash(1) A statutory demand shall be in Form 1 and shall be dated and signed by the creditor himself or by a person authorised to make the demand on the creditorrsquos behalf (2) The statutory demand shall state the actual amount of the debt that has accrued as of the date of the demand (3) If the amount claimed in the statutory demand includes interest penalties charges or any pecuniary consideration in lieu of interest it shall separately identify the actual amount that has accrued as at the date of the demand and the rate at which and the period for which it was calculated (4) The statutory demand shall state the consideration for the debt or if there is no consideration the way in which the debt arises and mdash (a) if the debt is founded on a judgment or an order of a court it must give details of the judgment or order including the action under which the judgment or order was obtained and the date of the judgment or order and (b) if the debt is founded on grounds other than a judgment or an order of a court it must give such details as would enable the debtor to identify the debt (5) If the creditor holds any property of the debtor or any security for the debt there shall be specified in the demand mdash (a) the full amount of the debt and (b) the nature and value of the security or the assets (6) The debt of which payment is claimed shall be the full amount of the debt less the amount specified as the value of the security or assets

Information to be given in statutory demand95 mdash(1) The statutory demand must include an explanation to the debtor of the following matters (a) the purpose of the demand and the fact that if the debtor does not comply with the demand bankruptcy proceedings may be commenced against him (b) the time within which the demand must be complied with if that consequence is to be avoided (c) the methods of compliance available to the debtor and (d) the debtors right to apply to the court to set aside the statutory demand (2) The statutory demand shall specify one or more named individuals with whom the debtor may if he wishes enter into communication for purposes of securing or compounding for the debt to the satisfaction of the creditor and the address and telephone number (if any) of any individual so named in the demand must be given (3) The debtor shall not be under any obligation to make inquiries in respect of the statutory demand except for the purposes given in paragraph (2) Requirements as to service96 mdash(1) The creditor shall take all reasonable steps to bring the statutory demand to the debtorrsquos attention (2) The creditor shall make reasonable attempts to effect personal service of the statutory demand (3) Where the creditor is not able to effect personal service the demand may be served by such other means as would be most effective in bringing the demand to the notice of the debtor (4) Substituted service under paragraph (3) may be effected in the following manner (a) by posting the statutory demand at the door or some other conspicuous part of the last known place of residence or business of the debtor or both (b) by forwarding the statutory demand to the debtor by prepaid registered post to the last known place of residence business or employment of the debtor

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(c) where the creditor is unable to effect substituted service in accordance with sub-paragraph (a) or (b) by reason that he has no knowledge of the last known place of residence business or employment of the debtor by advertisement of the statutory demand in one or more local newspapers in which case the time limited for compliance with the demand shall run from the date of the publication of the advertisement or (d) such other mode which the court would have ordered in an application for substituted service of an originating summons in the circumstances (5) Where a statutory demand is to be served out of jurisdiction the period to be stipulated in the statutory demand for compliance and setting aside of the demand shall not be less than 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on the debtor (6) A creditor shall not resort to substituted service of a statutory demand on a debtor unless mdash (a) the creditor has taken all such steps which would suffice to justify the court making an order for substituted service of a bankruptcy application and (b) the mode of substituted service would have been such that the court would have ordered in the circumstances (7) Where the statutory demand is made against a firm personal service of the statutory demand shall be deemed to have been effected on all the partners in the firm if it is served at the principal place of business of the firm in Singapore on any one of the partners or on any person having at the time of service control or management of the business of the firm thereat (8) If the creditor is unable to serve the statutory demand on the firm as required under paragraph (7) he may resort to substituted service in accordance with paragraphs (3) to (6) as if the statutory demand is against each of the partners in the firm

Application to set aside statutory demand97 mdash(1) Subject to paragraph (2) the debtor who has been served with a statutory demand may mdash (a) within 14 days or (b) where the demand was served outside jurisdiction within 21 days from the date on which the demand is served or deemed in accordance with these Rules to be served on him apply to court by way of originating summons for an order setting aside the statutory demand (2) No appearance need be entered to an originating summons under this rule (3) The court may upon the application of the debtor allow the debtor an extension of time to make his application to set aside the statutory demand (4) Unless the court otherwise orders the time limited for the debtor to comply with the statutory demand shall cease to run as from the date on which the application is filed in court (5) The application shall be supported by an affidavit mdash (a) specifying the date on which the statutory demand came into the debtorrsquos hands (b) stating the grounds on which the statutory demand should be set aside and (c) exhibiting a copy of the statutory demand (6) The application and the affidavit in support shall be filed at the same time and shall be served on the creditor within 3 days from the date of filing

Hearing of application to set aside statutory demand98 mdash(1) On the hearing of the application the court may either summarily determine the application or adjourn it giving such directions as it thinks appropriate (2) The court shall set aside the statutory demand if mdash (a) the debtor appears to have a valid counterclaim set-off or cross demand which is equivalent to or exceeds the amount of the debt or debts specified in the statutory demand (b) the debt is disputed on grounds which appear to the court to be substantial (c) it appears that the creditor holds assets of the debtor or security in respect of the debt claimed by the demand and either rule 94 (5) has not been complied with or the court is satisfied that the value of the assets or security is equivalent to or exceeds the full amount of the debt (d) rule 94 has not been complied with or (e) the court is satisfied on other grounds that the demand ought to be set aside (3) If the court dismisses the application it shall make an order authorising the creditor to file a bankruptcy application either on or after the date specified in the order

Proof of service of statutory demand108 mdash(1) Where a creditorrsquos bankruptcy application is based on non-compliance with a statutory demand an affidavit proving service of the statutory demand shall be filed in support of the application (2) The affidavit shall state the mode date and time of the service and shall exhibit a copy of the statutory demand and any acknowledgment of service

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(3) Where the statutory demand has been served other than by personal service the affidavit shall mdash (a) give particulars of the steps taken to effect personal service and the reasons for which they have been ineffective (b) state the means whereby (attempts at personal service having been unsuccessful) it was sought to bring the demand to the debtorrsquos attention and explain why such means would have best ensured that the demand would be brought to the debtorrsquos attention (c) exhibit evidence of such alternative mode or modes of service and (d) specify a date by which to the best of the knowledge information and belief of the person making the affidavit the demand would have come to the debtorrsquos attention (4) The steps of which particulars are given for the purposes of paragraph (3) (a) must be such as would have sufficed to justify an order for substituted service of a bankruptcy application being made by the court (5) If the affidavit specifies a date for the purposes of compliance with paragraph (3) (d) then unless the court otherwise orders that date shall be deemed for the purposes of these Rules to have been the date on which the statutory demand was served on the debtor (6) The court shall dismiss the creditorrsquos bankruptcy application if it is not satisfied that the creditor has discharged the obligations imposed on him by rule 96

Form 1 ndash- State partrs of debt

o Amt of debt due as date of ddo Principal sumn owedo Interest due incl how caclo Consideration for debt and details of judgemento Partrs of any securityo Partrs of assignment of debt

- Service of stat ddo Personal service ndash reasonable attemotso Subst service

Posting Prepaid registere post Advert Others

- Effecto Compliance whtin 21 dayso ( failure to complyset aside within 21 days after service leads to) presumption of inability to pay

debts Presentation of Petition

(All dispositions of property rendered void from this point) but in practice takes long time and quite difficult troublesome if to have it this way

Service Hearing Bankruptcy Order against individual or firm (Bankruptcy commences from date of order)

- Application to set asideo File within 14 days of stat dd serviceo OSo Grds for setting aside

Mode of Service of Stat Demand and Bankruptcy Petition ndash when service is valid under bankruptcy rules

Re Ramaschayana Sulistyo [2005] 1 SLR 483- Issue The debtors had been parties to a Guarantee which provided for service of process to be made to

their nominated forwarding agent Service of the stat demands and petitions were effected as such Was this in contravention of Rules 96 and 109 Bankruptcy Rules

- Arrangement to serve papers on each other- Not served in usual manner therefore- So whether service valid- Impt ndash if not then appiction for banktrupcy x go through

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

- Held Service was valid Nothing in the Bankruptcy Act or Rules precluded against consensual arrangements for the service of process

Appeal against making of Bankruptcy Order

Re Jeyaretnam Joshua Benjamin [2000] 3 SLR 207 Bankruptcy No 3130 of 1999- Facts

- Petitions were filed against the debtor An installment plan was agreed upon and the petitions were adjourned The debtor subsequently defaulted after some payments were made

- Creditor started petition- The petitions were heard and a Bankruptcy Order was made The debtor argued that the

installment payments had brought his debt level below the $10000 minimum - Recall under s61 it is stated that no petition to be presented unless the debt was more than

$10000 at the time of petition - Held

- On the facts of the case the bankruptcy petition was not defective - A Bankruptcy Order can be made even though the Judgment debtor has subsequent

to the presentation of the bankruptcy petition made payment to bring the debt owed to below the statutory limit of $1000000

- The statutory minimum debt of $10000 specified in s 61(1)(a) of the Act applied only at the time of presentation of a petition

- So even if after presentation presented even if falls below 10000 order of bankruptcy can still be made

- Lecturer Hence it is very clear that the pertinent point is the presentation of the petition not the time of hearing

Personal Comments - However it is arguable whether JBJ case is really as strong an authority for the proposition above- This is because on the facts of the case the amount of debt was clearly above $10000 and there was really

no need for the learned Judicial Commissioner to got into those facts - Hence the proposition that the debt need not be above the statutorily mandated amount at the time of

hearing of the bankruptcy order was only obiter and according to Cross amp Harris on Stare Decisis a subsequent court is not obliged to follow this principle

- In fact in the UK case of Re Patel a debtor [1986] 1 WLR 221 it was held that there was a need to satisfy the requirements both at time of presentation of petition and at the time of hearing

- Although this case was decided before the Singapore Bankruptcy Act was enacted the English Court was construing a very similar provision to our present section 62 BA ==gt although this case has not been relied upon in our local courts it is persuasive authority

- Difficulty with relying on this case o Because of the need for all requirements to be present at the time of the bankruptcy order hearing

the creditor who intends to present a bankruptcy petition has to be careful when accepting tender part-tender of re-payment

o It was held in Re Patel at page 224 paragraph (e) ndash (f) that the creditor must be careful to accept tender or part tender in fact he is not obliged to do so and hence should avoid doing so

Recent CA case of Medical Equipment Pte Ltd v Alice Sim Kiok Lan [1999] 1 SLR 70 (IMPT)- Petitioning creditor (PC) did not get orderhellip and the PC appealed to have bankruptcy order made against the

debtor- Involved 2 debtors under voluntary arrangements- CA held(1) Both sections s60 61 65 are applicable to petitions presented to Section 57(1)(a)(ii) [voluntary

arrangements](2) Failure to comply with Section 61 is not a mere formal defect or irregularity that did not cause substantial injustice S158 could not be invoked==gt appeal dismissed

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

- Note Section 158 BA provides that no proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court

Formal defect not to invalidate proceedings or acts158 mdash(1) No proceedings in bankruptcy shall be invalidated by any formal defect or by any irregularity unless the court before which an objection is made to the proceedings is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court (2) The acts of a person as the trustee of a bankruptrsquos estate or as a special manager and the acts of the creditorsrsquo committee appointed for any bankruptcy shall be valid notwithstanding any defect in the appointment election or qualifications of the trustee or manager or as the case may be of any member of the committee

EFFECT OF BANKRUPTCY ON CREDITORS

Legal moratorium - 1048729 No further proceedings may be taken by creditors for debts incurred before bankruptcy except with

leave of court - Section 76 (1)(c) creditor has to stop all action and proceedings x go further some cases where lawyers ask for permission and assume tt letter is enough not enough ndash must get court order If not and creditor proceed may nt recover anything

and may not even recover costs this is because all creditors should have to share pari passu with the general pool of creditors

Effect on secured creditors- 1048729 All secured creditors cannot claim further interest if they do not realise security within six months from

the date of the bankruptcy order or such further period as the Official Assignee may determine - Section 76(4)

in many cases where bankrupt bankrupt because in default of mortgage bank x sell it off delay in realising security within 6 mths then wont be able to recover further interest no matter how much may have been incurred

Must realize within 6 mths or write in to OA before 6 mths up When writing state clearly why they have not sold property or realized the security

- bankruptcy does not affect the secured creditorrsquos right to deal with the property as though the debtor has not been made a bankrupt

o there is no duty under Land Law for the sale of the security upon default only duty is to get the best reasonable price when realising the security

o hence there were cases where secured creditors hung onto the property and to charge contractual interests into the security

o hence with the provision they cannot charge interest if they want to dispose the property beyond 6 months

o however there is an informal application that can be made to the OA [no procedure provided for by the rules] to state why they cannot discharge the property within the 6 months

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Effect on ordinary creditors - 1048729 Ordinary creditors will rank behind preferential creditors - Section 90

in fact if not enough money to pay all creditors in full which is isu the case then if rank eq will be paid proportionately but some creditors lsquomore eq than othersrsquo eg CPF board income and property tax

Preferential creditors include Income Tax GST etc

Priority of debts90 mdash(1) Subject to this Act in the distribution of the property of a bankrupt there shall be paid in priority to all other debts mdash (a) firstly the costs and expenses of administration or otherwise incurred by the Official Assignee and the costs of the applicant for the bankruptcy order (whether taxed or agreed) and the costs and expenses properly incurred by a nominee in respect of the administration of any voluntary arrangement under Part V (b) secondly subject to subsection (2) all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee (c) thirdly subject to subsection (2) the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment whether such amount becomes payable before on or after the date of the bankruptcy order (d) fourthly all amounts due in respect of any workmenrsquos compensation under the Workmenrsquos Compensation Act (Cap 354) accrued before on or after the date of the bankruptcy order (e) fifthly all amounts due in respect of contributions payable during the 12 months immediately before on or after the date of the bankruptcy order by the bankrupt as the employer of any person under any written law relating to employeesrsquo superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act (Cap 134) (f) sixthly all remuneration payable to any employee in respect of vacation leave or in the case of his death to any other person in his right accrued in respect of any period before on or after the date of the bankruptcy order and (g) seventhly the amount of all taxes assessed and any goods and services tax due under any written law before the date of the bankruptcy order or assessed at any time before the time fixed for the proving of debts has expired (2) The amount payable under subsection (1) (b) and (c) shall not exceed an amount that is equivalent to 5 monthsrsquo salary whether for time or piecework in respect of services rendered by any employee to the bankrupt or $7500 whichever is the less (3) The Minister may by order published in the Gazette amend subsection (2) by varying the amount specified in that subsection as the maximum amount payable under subsection (1) (b) and (c) (4) For the purposes of subsection (1) (b) and (c) mdash employee means a person who has entered into or works under a contract of service with the bankrupt and includes a subcontractor of labour wages or salary includes mdash (a) all arrears of money due to a subcontractor of labour (b) any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination as the case may be whether such amount becomes payable before on or after the date of the bankruptcy order and (c) any amount payable to an employee on termination of his employment as a gratuity under any contract of employment or under any award or agreement that regulates the conditions of his employment whether such amount becomes payable before on or after the date of the bankruptcy order (5) For the purposes of subsection (1) (c) mdash ex gratia payment means the amount payable to an employee on the bankruptcy of his employer or on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be retrenchment benefit means the amount payable to an employee on the bankruptcy of his employer on the termination of his service by his employer on the ground of redundancy or by reason of any re-organisation of the employer profession business trade or work and ldquothe amount payable to an employeerdquo for these purposes means the amount stipulated in any contract of employment award or agreement as the case may be or if no amount is stipulated therein such amount as is stipulated by the Commissioner for Labour (6) The debts in each class specified in subsection (1) shall rank in the order therein specified but debts of the same class shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them in which case they shall abate in equal proportions between themselves (7) Where any payment has been made to any employee of the bankrupt on account of wages salary or vacation leave out of money advanced by a person for that purpose the person by whom the money was advanced shall in a bankruptcy have a right of priority in respect of the money so advanced and paid up to the amount by which the sum in respect of which the employee would have been entitled to priority in the bankruptcy has been diminished by reason of the payment and shall have the same right of priority in respect of that amount as the employee would have had if the payment had not been made (8) Where any creditor has given any indemnity or made any payment of moneys by virtue of which any asset of the bankrupt has been recovered protected or preserved the court may make such order as it thinks just with respect to the distribution of such asset with a view to giving that creditor an advantage over other creditors in consideration of the risks run by him in so doing (9) Where an interim receiver has been appointed under section 73 before the making of the bankruptcy order the date of the appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order

==gt Only when all these statutorily prioritized creditors have been paid in full that the general creditors come in

Objective 3 ndash increase official assigneersquos powers

CONSEQUENCES OF BANKRUPTCY ON BANKRUPT- 1048729 The bankruptrsquos properties are vested in the Official Assignee and become divisible among his creditors

- Sections 76 (1) amp 78 cannot deal with his property if vest in OA ndash even if in hiscreditorrsquosfriendrsquos possession eg car parked with friend friend cannot take car still belongs to OA for administration

Effect of bankruptcy order76 mdash(1) On the making of a bankruptcy order mdash (a) the property of the bankrupt shall mdash (i) vest in the Official Assignee without any further conveyance assignment or transfer and (ii) become divisible among his creditors (b) the Official Assignee shall be constituted receiver of the bankruptrsquos property and (c) unless otherwise provided by this Act mdash (i) no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the person or property of the bankrupt in respect of that debt and (ii) no action or proceedings shall be proceeded with or commenced against the bankrupt except by leave of the court and in accordance with such terms as the court may impose (2) Where a bankruptcy order is made against a firm the order shall operate as if it were a bankruptcy order made against each of the persons who at the time of the order is a partner in the firm (3) This section shall not affect the right of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted (4) Notwithstanding subsection (3) and section 94 no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realise his security within 6 months from the date of the bankruptcy order or such further period as the Official Assignee may determine

Description of bankruptrsquos property divisible amongst creditors78 mdash(1) The property of the bankrupt divisible among his creditors (referred to in this Act as the bankruptrsquos estate) shall comprise mdash (a) all such property as belongs to or is vested in the bankrupt at the commencement of his bankruptcy or is acquired by or devolves on him before his discharge and

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(b) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge (2) Subsection (1) shall not apply to mdash (a) property held by the bankrupt on trust for any other person (b) the tools if any of his trade (c) such clothing bedding furniture household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family and (d) property of the bankrupt which is excluded under any other written law

- 1048729 The bankrupt is required to file a Statement of Affairs (SA) disclosing his assets and liabilities - Section 81

very impt ndash declaration stating his assets and liab if advising someone to be made bankrupt must advise tt SA to be field and to be truthful X

be misleading If misleading may be taken as attempt to mislead as to assets ndash an offence Can also ask for copy of SA if representing creditors

Bankruptrsquos statement of affairs81 mdash(1) Where a bankruptcy order has been made against an individual otherwise than on a debtorrsquos bankruptcy application the bankrupt shall submit a statement of his affairs to the Official Assignee within 21 days from the date of the bankruptcy order (2) Where a bankruptcy order has been made against a firm mdash (a) on a creditorrsquos bankruptcy application the bankrupts being the partners in the firm at the time of the order shall submit a joint statement of their partnership affairs and each partner in the firm shall submit a statement of his separate affairs or (b) on a debtorrsquos bankruptcy application every person who at the time of the order is a partner in the firm but who did not join in the application shall submit a statement of his separate affairs to the Official Assignee within 21 days from the date of the bankruptcy order (3) The statement of affairs referred to in subsection (2) shall contain mdash (a) such particulars of the bankruptrsquos assets creditors debts and other liabilities as may be prescribed (b) in the case of a firm such particulars of the firmrsquos assets creditors debts and other liabilities as may be prescribed and (c) such other information as may be prescribed (4) The Official Assignee may if he thinks fit mdash (a) release the bankrupt from his duty under subsection (1) or (2) as the case may be or (b) extend the period specified in subsection (1) or (2) (5) Where the Official Assignee has refused to exercise a power conferred by this section the court if it thinks fit may exercise it (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction (7) Any person stating himself in writing to be a creditor of the bankrupt may personally or by agent inspect the statement of affairs filed by the bankrupt under this section at all reasonable times and upon payment of the prescribed fee take any copy thereof or extract therefrom (8) Any person untruthfully stating himself to be a creditor under subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2000 or to imprisonment for a term not exceeding 6 months or to both

- 1048729 The bankrupt cannot leave the country without permission from the Official Assignee - Section 131 (1)(b)

to prevent him fr absconding

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

diff in practice ndash quite a few pple may need to do so for employment write to OA and make application and ask for permission if advising the bankrupt ask him to make applic beforehand not 48 hrs before the due to

leave and expect clearance to be given

- It is an offence under s131(1)(b) if he leaves the jurisdiction without the leave of the OA For every infringement a summons can be taken against the bankrupt Penalty ndash up to 1 month imprisonment

Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

- 1048729 The bankrupt cannot bring an action without obtaining permission from the Official Assignee except for action for damages in respect of injury to his person - Section 131 (1)(a)

need to pay security for costs of expected action but if bankrupt has had industrial action for eg and wants to sue can just go ahead and show

tt is suing because of injury

- 1048729 The bankrupt cannot incur credit exceeding $500 without disclosing his bankruptcy - Section 141(1) (a) ndash note does not cover guarantor-ship although bankrupts are advised not to be guarantors See below for provision

Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash (a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services

- 1048729 The bankrupt cannot be a director of a company or play a direct or indirect part in the management of the company or business unless he has obtained the Official Assigneersquos permission or leave of court - Section 22 of Business Registration Act amp Section 148 of Companies Act

varies fr case to case usu those who make applics are those who are trading in business and need to do work

themselves so need to apply for permission ndash Note permission from the OA is a much cheaper alternative

- 1048729 The bankrupt cannot be a trustee or a personal representative unless permission is obtained from the Court - Section 130

may be made personal rep due to someonersquos will and need to apply for letter of probate ndash need permission

in practice will ask OA whether can do so ndash su advice is to get someone else to take up the job

handling assets on trust and easy to mix up with own personal assets ndash can create difficulty where both beneficiaries and trustee both believe tt own money

so OA wila dvise to get oen money

Disqualification of bankrupt130 mdash(1) In addition to any disqualification under any other written law a bankrupt shall be disqualified from

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

being appointed or acting as a trustee or personal representative in respect of any trust estate or settlement except with leave of the court (2) Any disqualification to which a bankrupt is subject under this section shall cease when mdash (a) the bankruptcy order against him is annulled or rescinded or (b) he is discharged under Part VIII (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both

Bankruptcy Offences ndash usu handled by official assignee- bankrupt x pay debts so courts x impose fine- std sentence is jail

prev cases stated tt 3rd party if pay fine will reduce punitive effect and offence will be repeated more often

- bull PP v Choong Kian Haw [2002] 4 SLR 776 bull Fines were generally not a suitable means of punishment for bankrupts since they lack the

means to pay the fines themselves If a 3rd party paid the fines the punitive effect is diminished on the offenders

- PP v Teoh Hock Kooi [2004] SGDC 254 Offence under s141(1)(a) Bcy Act ndash obtaining credit Convicted and sentenced to 18 mths

imprisonment- PP v Heng Hiang Ngee [ 2004] SGMC 15

Offences under s131(1)(b) - unauthorised travelling Convicted of 3 counts and sentenced to 7 and a half months imprsonment 56 other counts were taken into consideration for sentencing

a) new offences and increased penalties- Bankrupts recalcitrant breach legal oblig or uncooperative in admin of bankruptcy subj to prosecution

- S816- S821a- S821b

Bankruptrsquos statement of affairs81 (6) A bankrupt who mdash (a) without reasonable excuse fails to comply with the obligation imposed by this section (b) without reasonable excuse submits a statement of affairs which does not comply with the prescribed requirements (c) submits a statement of affairs which is false and which he either knows or believes to be false or does not believe to be true or (d) submits a statement which is misleading in any material particular or contains any material omission shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

Bankrupt to submit accounts82 mdash(1) A bankrupt who has not obtained his discharge shall unless otherwise directed by the Official Assignee mdash (a) submit to the Official Assignee once in every 6 months an account of all moneys and property which have come to his hands for his own use during the preceding 6 months or such other period as the Official Assignee may specify or (b) pay and make over to the Official Assignee so much of such moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family (2) A bankrupt who fails to comply with subsection (1) (a) or (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both and in the case of a continuing offence to a further fine not exceeding $200 for every day during which the offence continues after conviction

- S1303- S1311a

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

- S1311b- Part X

Disqualification of bankrupt130 (3) Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5000 or to imprisonment for a term not exceeding 12 months or to both Disabilities of bankrupt131 mdash(1) Where a bankrupt has not obtained his discharge mdash (a) he shall be incompetent to maintain any action other than an action for damages in respect of an injury to his person without the previous sanction of the Official Assignee and (b) he shall not leave remain or reside outside Singapore without the previous permission of the Official Assignee (2) A bankrupt who fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 2 years or to both

BANKRUPTCY OFFENCESInterpretation of this Part132 In this Part mdash (a) references to property comprised in the bankruptrsquos estate or to property possession of which is required to be delivered up to the Official Assignee shall include any property mentioned in section 78 (1) (b) ldquoinitial periodrdquo means the period between the making of the bankruptcy application by or against a debtor and the commencement of his bankruptcy (c) a reference to a number of months or years before the making of a bankruptcy application shall be read as a reference to that period ending with the making of the bankruptcy application and (d) ldquoOfficial Assigneerdquo includes a trustee in bankruptcy appointed under section 33 Defence of innocent intention133 In the case of an offence under any provision of this Part other than sections 135 (e) 137 140 (2) 142 143 and 145 a person shall not be guilty of the offence if he proves that at the time of the conduct constituting the offence he had no intent to defraud or to conceal the state of his affairs Non-disclosure134 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he does not to the best of his knowledge and belief disclose to the Official Assignee all the property comprised in his estate or (b) he does not inform the Official Assignee of any disposal of any property which but for the disposal would be comprised in his estate stating how when to whom and for what consideration the property was disposed of (2) Subsection (1) (b) shall not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family Concealment of property135 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of such part of the property comprised in his estate as is in his possession or under his control of which he is required by law to deliver up (b) he conceals any debt due to or from him or conceals any property the value of which is not less than $500 and possession of which he is required to deliver up to the Official Assignee (c) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (b) if the bankruptcy order against him had been made immediately before he did it (d) he removes or in the initial period removed any property the value of which is or was not less than $500 and possession of which he is or would have been required to deliver up to the Official Assignee or (e) he without reasonable excuse fails on being required to do so by the Official Assignee or the court mdash (i) to account for the loss of any substantial part of his property incurred in the 12 months before the making of the bankruptcy application by or against him or in the initial period or (ii) to give a satisfactory explanation of the manner in which such a loss was incurred Concealment of books and papers falsification etc136 A bankrupt shall be guilty of an offence if mdash (a) he does not deliver up possession to the Official Assignee or as the Official Assignee may direct of all books papers and other records of which he has possession or control and which relate to his estate or his affairs

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(b) he prevents or in the initial period prevented the production of any books papers or records relating to his estate or affairs (c) he conceals destroys mutilates or falsifies or causes or permits the concealment destruction mutilation or falsification of any books papers or other records relating to his estate or affairs (d) he makes or causes or permits the making of any false entries in any book document or record relating to his estate or affairs (e) he disposes of or alters or makes any omission in or causes or permits the disposal altering or making of any omission in any book document or record relating to his estate or affairs or (f) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (c) (d) or (e) if the bankruptcy order against him had been made before he did it False statements137 A bankrupt shall be guilty of an offence if mdash (a) he makes any false statement or any material omission in any statement under this Act relating to his affairs (b) knowing or believing that a false debt has been proved by any person under the bankruptcy he fails to inform the Official Assignee as soon as practicable (c) he attempts to account for any part of his property by fictitious losses or expenses (d) at any meeting of his creditors in the 12 months before the making of the bankruptcy application by or against him or (whether or not at such a meeting) at any time in the initial period he did anything which would have been an offence under paragraph (c) if the bankruptcy order against him had been made before he did it or (e) he is or at any time has been guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors or any of them to an agreement with reference to his affairs or to his bankruptcy Fraudulent disposal of property138 mdash(1) A bankrupt shall be guilty of an offence if mdash (a) he makes or causes to be made or has during the period of 5 years prior to the date of the bankruptcy order against him made or caused to be made any gift or transfer of or any charge on his property or (b) he conceals or removes or has at any time before the commencement of the bankruptcy concealed or removed any part of his property after or within 2 months before the date on which a judgment or order for the payment of money has been obtained against him being a judgment or order which was not satisfied before the commencement of his bankruptcy (2) In this section the reference to making a transfer of or a charge on any property includes causing or conniving at the levying of any execution against that property Absconding with property139 A bankrupt shall be guilty of an offence if mdash (a) he leaves or attempts or makes preparations to leave Singapore with any property the value of which is $500 or more and possession of which he is required to deliver up to the Official Assignee or (b) in the 12 months before the making of the bankruptcy application by or against him or in the initial period he did anything which would have been an offence under paragraph (a) if the bankruptcy order against him had been made immediately before he did it Fraudulent dealing with property obtained on credit140 mdash(1) A bankrupt shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against him or in the initial period he disposed of any property which he had obtained on credit and at the time he disposed of it had not paid for (2) A person shall be guilty of an offence if in the 12 months before the making of the bankruptcy application by or against a bankrupt or in the initial period he acquired or received property from the bankrupt knowing or believing mdash (a) that the bankrupt owed money in respect of the property and (b) that the bankrupt did not intend or was unlikely to be able to pay the money so owed (3) A person shall not be guilty of an offence under subsection (1) or (2) if the disposal acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal acquisition or receipt (4) In determining for the purposes of this section whether any property is disposed of acquired or received in the ordinary course of a business carried on by the bankrupt regard may be had in particular to the price paid for the property (5) In this section any reference to disposing of property shall be read as including pawning or pledging of such property and any reference to acquiring or receiving property shall be read accordingly Obtaining credit engaging in business141 mdash(1) A bankrupt shall be guilty of an offence if being an undischarged bankrupt mdash

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(a) either alone or jointly with any other person he obtains credit to the extent of $500 or more from any person without informing that person that he is an undischarged bankrupt or (b) he engages in any trade or business under a name other than that under which he was adjudicated bankrupt without disclosing to all persons with whom he enters into any business transaction the name under which he was adjudicated bankrupt (2) In this section any reference to a bankrupt obtaining credit shall be read as including any case in which mdash (a) goods are bailed to him under a hire-purchase agreement and (b) he is paid in advance (whether in money or otherwise) for the supply of goods or services Failure to keep proper accounts of business142 mdash(1) A bankrupt shall be guilty of an offence if having been engaged in any business within 2 years before the making of the bankruptcy application by or against him he has not mdash (a) kept proper accounting records throughout that period and throughout any part of the initial period in which he was so engaged or (b) preserved all the accounting records which he has kept (2) For the purposes of this section a person shall be deemed not to have kept proper accounting records if he has not kept such records as are necessary to show or explain his transactions and financial position in his business including mdash (a) records containing entries from day to day in sufficient detail of all cash paid and received (b) where the business involved dealings in goods statements of annual stock-takings and (c) except in the case of goods sold by way of retail trade to the actual customer records of all goods sold and purchased showing the buyers and sellers in sufficient detail to enable the goods and the buyers and sellers to be identified (3) A bankrupt shall not be guilty of an offence under subsection (1) mdash (a) if his unsecured liabilities at the commencement of the bankruptcy did not exceed $10000 or (b) if he proves that in the circumstances in which he carried on business the omission was honest and excusable Gambling143 mdash(1) A bankrupt shall be guilty of an offence if he has mdash (a) in the 2 years before the making of the bankruptcy application by or against him materially contributed to or increased the extent of his insolvency by gambling or by rash and hazardous speculations or (b) in the initial period lost any part of his property by gambling or by rash and hazardous speculations (2) In determining for the purposes of this section whether any speculation was rash and hazardous the financial position of the bankrupt at the time when he entered into them shall be taken into consideration Bankrupt incurring debt without reasonable ground of expectation of being able to pay it144 A bankrupt shall be guilty of an offence if mdash (a) within 12 months before the making of a bankruptcy application by or against him or during the initial period he incurs any debt provable in bankruptcy or (b) having been engaged in carrying on any trade or business he continues to trade or carry on business by incurring any debt provable in bankruptcy within 12 months before the date of the making of a bankruptcy application by or against him or during the initial period he being insolvent on the date of incurring the debt without any reasonable ground of expectation of being able to pay it Making of false claims etc145 mdash(1) Any creditor in any bankruptcy composition or arrangement with creditors shall be guilty of an offence if he makes any claim proof declaration or statement of account which is untrue in any material particular unless he satisfies the court that he had no intent to defraud (2) A creditor shall be guilty of an offence if he obtains or receives any money property or security from any person as an inducement for forbearing to oppose or for consenting to the discharge of a bankrupt (3) A person shall be guilty of an offence if he knowing that a bankruptcy order has been made against a debtor removes conceals receives or otherwise deals with or disposes of any part of the property of the debtor with intent to defeat the order (4) Fines imposed and levied under this section shall be deemed to be part of the property of the bankrupt and shall vest in the Official Assignee Penalty146 A person guilty of any offence under this Part shall be liable on conviction to a fine not exceeding $10000 or to imprisonment for a term not exceeding 3 years or to both Supplementary provisions147 mdash(1) It shall not be a defence in proceedings for an offence under this Act that anything relied on in whole or in part as constituting that offence was done outside Singapore (2) In a charge for an offence under this Act it shall be sufficient to set forth the substance of the offence charged in the words of this Act specifying the offence or as near thereto as circumstances admit without alleging or

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

setting forth any debt demand application or any proceedings in or order warrant or document of any court acting under this Act (3) Where a bankrupt has been guilty of any offence under this Act he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that the bankruptcy order made against him has been annulled or rescinded

b) power of entry and seizure- OA empowered to enter bankruptrsquos premies search and take inventory and seize assets without court order

or search warrant

c) power to impound passports- OA empoewered to

o Impound bnmkruptsrsquo passportso Direct controller ofimmigration to prevent bankrupts fr leaving sg

Objective 5 ndash MAXIMIZE RECOVERY OF ASSETS

a) control of secured creditors- under old act secured creditors x disclose security or delayed or refused to realize secured asets ndash to

detriment of unsecred creditors and bankrupts since surplus fr proceeds of realization substantially eroded by claims for outstanding interests

- s63 ndash req secured creditor whoy present bankrptyc petition against debtor to state willigness to surrender security to OA for general benfit of creditors or give est of security

o failure =gt security surrendered for gnerla benfit of creditors

Where applicant for bankruptcy order is secured creditor63 mdash(1) Where the applicant for a bankruptcy order is a secured creditor of the debtor he shall in his application mdash (a) state that he is willing in the event of a bankruptcy order being made to give up his security for the benefit of the other creditors of the bankrupt or (b) give an estimate of the value of his security in which case he may to the extent of the balance of the debt due to him after deducting the value so estimated be admitted as a creditor in the same manner as if he were an unsecured creditor (2) Where an applicant for a bankruptcy order who is a secured creditor of the debtor fails to disclose his security in the application he shall be deemed to have given up his security for the benefit of the other creditors of the debtor and upon the making of a bankruptcy order mdash (a) he shall not be entitled to enforce his security against the estate of the bankrupt or to retain any proceeds from the realisation of such security and (b) he shall execute such document of release as is required by the Official Assignee or account and pay over to the Official Assignee all proceeds from any realisation of his security (3) Where any secured creditor fails to execute any document of release as is required by the Official Assignee under subsection (2) (b) the Official Assignee may execute the document on his behalf and the execution of the document by the Official Assignee shall have the same effect as the execution thereof by the secured creditor (4) Any secured creditor who fails to account or pay over to the Official Assignee the proceeds from any realisation of his security under subsection (2) (b) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $15000 or to imprisonment for a term not exceeding 3 years or to both (5) Any fine imposed under subsection (4) shall be deemed part of the property of the bankrupt and shall vest in the Official Assignee for the purposes of this Act

- once bankruptcy order made secured creditor x permitted to enforce security or retain proceeds fr reasliation of secuiryt

- OA may direct him to execute docs of release and acct for proceeds of realization of security- OA also empowered to eecute doc of release on secured creditorsrsquo behalf

o Failure to do so is offence punishable on conviction with fine up to 15000 or imprisonment not exceeding 3 yrs or both

- S764 ndash secured creditors must realize security within 6 mths after bankruptcy order or suth further period as may be allowed by OA

o Failure =gt creditors deprived of interest on secured debt after date of bankruptcy order

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

o Bankruptcy rules aso contain provn regulating declaration of securities when secured creditors file or register proofs of debt against bankruptcy estate

b) insolvency assistance fund- S165 ndash estment of fund- Novel mechanism to finance itigation on behslf of bankruptcy estate where bankrupt has gd claim for

recovery of assets but x afford to commence or maintain proceedings- Financing of fund comes fr unclaimed monies received under s164 and costs recovered by official assignee

in any proceedings taken under bankruptcy act n which monies fr fund utilized- Fund may be applied -

o To fund costs of procedigns on behalf of bankruptrsquos estaes or to recover assetso To fund admin of bankruptcy estate as OA may determineo Remunerate special managers appted to manage bankruptrsquos estate business or interestso For such other purposes as may be prescribed by minister

- Fund x applied ifo OA not satisfied as t merit of actiono Sufficient monies in bankruptcy estat

Insolvency Assistance Fund165 mdash(1) The Official Assignee shall maintain and administer a fund to be known as the Insolvency Assistance Fund (referred to in this section as the Fund) in accordance with such rules as may be prescribed (2) There shall be paid into the Fund mdash (a) all unclaimed moneys referred to in section 164 (3) and (b) all costs and fees recovered by the Official Assignee in any proceedings taken under this Act in which moneys from the Fund were applied (3) Subject to subsections (4) and (6) the Fund may be applied by the Official Assignee for all or any of the following purposes (a) for the remuneration of special managers appointed under section 113 (b) for the payment of all costs fees and allowances to solicitors and other persons in proceedings on behalf of a bankruptrsquos estate or to recover assets of the estate (c) for the payment of such costs and fees in the administration of a bankruptrsquos estate as the Official Assignee may determine (d) for such other purposes as may be prescribed (4) If any claimant makes any demand against the Official Assignee for any amount of unclaimed moneys paid into the Fund under subsection (2) (a) the Minister may direct that payment of that amount free of interest be made to the claimant out of the Consolidated Fund (5) No moneys from the Fund shall be applied for any proceedings where in the opinion of the Official Assignee there is no reasonable ground for taking defending continuing or being a party to the proceedings or where there are sufficient moneys for such purpose in the bankruptrsquos estate (6) The Minister may from time to time pay such sums of moneys in the Fund into the Consolidated Fund as he may determine

c) undervalue transactions s98- Consideration at sigf less value- In consideration of marriage- Gifts- Transaction taken place within 5 yrs ending with presentation of petition- Debtor must be insolvent at itme of tranaction or as result of transaction- Presumotn of insolvency if entered with an associate

Transactions at an undervalue98 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) entered into a transaction with any person at an undervalue the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction (3) For the purposes of this section and sections 100 and 102 an individual enters into a transaction with a person at an undervalue if mdash

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(a) he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration (b) he enters into a transaction with that person in consideration of marriage or (c) he enters into a transaction with that person for a consideration the value of which in money or moneyrsquos worth is significantly less than the value in money or moneyrsquos worth of the consideration provided by the individual

d) unfair preferences s99- Pref given to creditor surety or guarantor- Putting recipient in better position than otherwise- Debtor desirous of according better status to recipient- Insolvent at time of tranaction or due to tranaction- Unfair pref msut have taken place iwhtin 2 yrs ending with date of presentation of bankruptcy petition where

recipient is associate- Within 6 mths in al other cases

Unfair preferences99 mdash(1) Subject to this section and sections 100 and 102 where an individual is adjudged bankrupt and he has at the relevant time (as defined in section 100) given an unfair preference to any person the Official Assignee may apply to the court for an order under this section (2) The court shall on such an application make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference (3) For the purposes of this section and sections 100 and 102 an individual gives an unfair preference to a person if mdash (a) that person is one of the individualrsquos creditors or a surety or guarantor for any of his debts or other liabilities and (b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which in the event of the individualrsquos bankruptcy will be better than the position he would have been in if that thing had not been done (4) The court shall not make an order under this section in respect of an unfair preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (3) (b) (5) An individual who has given an unfair preference to a person who at the time the unfair preference was given was an associate of his (otherwise than by reason only of being his employee) shall be presumed unless the contrary is shown to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4) (6) The fact that something has been done in pursuance of the order of a court does not without more prevent the doing or suffering of that thing from constituting the giving of an unfair preference

COMMON ASSETS REALISED- 1048729 bank accounts- 1048729 private properties- 1048729 jewelleries

occur when bankrupts place this in afe dpoesit box ndash this will be frozen and OA will send someone to open it up and check assets

jt dsafe deposit box where one owner bankrupt ndash if so everything inside belongs to the bankrupt as starting pt then to sort out what belongs to bankrupt and what doesnrsquot see on case by case basis eg other claimant to provide receipts of sale etc to prove tt

it is hers- 1048729 motor vehicles- 1048729 insurance policies (unless protected under Section 73 of Conveyancing and Law of Property Act)

beneficiary - under certain cirucsmntnaves trusts created under s73 ndash when this happens then x come under bankrupt assets and juris of OA

Moneys payable under policy of assurance not to form part of the estate of the insured73 mdash(1) A policy of assurance effected by any man on his own life and expressed to be for the benefit of his wife or of his children or of his wife and children or any of them or by any woman on her own life and expressed to be for the benefit of her husband or of her children or of her husband and children or any of them

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

shall create a trust in favour of the objects therein named and the moneys payable under any such policy shall not so long as any object of the trust remains unperformed form part of the estate of the insured or be subject to his or her debts (2) If it is proved that the policy was effected and the premiums paid with intent to defraud the creditors of the insured they shall be entitled to receive out of the moneys payable under the policy a sum equal to the premiums so paid (3) The insured may by the policy or by any memorandum under his or her hand appoint a trustee or trustees of the moneys payable under the policy and from time to time appoint a new trustee or new trustees thereof and may make provision for the appointment of a new trustee or new trustees thereof and for the investment of the moneys payable under any such policy (4) In default of any such appointment of a trustee the policy immediately on its being effected shall vest in the insured and his or her legal personal representatives in trust for the purposes aforesaid (5) If at the time of the death of the insured or at any time afterwards there is no trustee or it is expedient to appoint a new trustee or new trustees a trustee or trustees or a new trustee or new trustees may be appointed by the High Court (6) The receipt of a trustee or trustees duly appointed or in default of any such appointment or in default of notice to the insurance office the receipt of the legal personal representative of the insured shall be a discharge to the office for the sum secured by the policy or for the value thereof in whole or in part

Bankruptrsquos tools of trade basic necessities (Section 78(2) HDB flat (Section 51 of Housing amp Development Act) and CPF moneys

(Section 24 of CPF Act) are protected from his creditors these will not be seized

objective 6 ndash REGIME FOR EASIER DISCHARGES FR BANKRUPTCY- rationale for easy discharge

o re shackleton ex parte shackleton cave J ndash if impose burden preventing amn fr bettering position wil not make effort to do so

o prof jayakumar minister for law ndash main weakness of present legis (before amendment) is diff of obt discharge fr bankruptcy ndash not possible unless satisfies debts in full or proposes scheme of arrangement or composition acceptable to creditor most creditors x prepared to accept Little incentive for bankrupts to seek actively discharge in disclosing assets and cooperating with official assignee

- No automatic discharge in Singapore In HK there is automatic discharge after 3 years

DISCRETIONARY DISCHARGE- 1048729 Our bankruptcy regime provides discretionary discharge and not automatic discharge as in many

other countries such as UK New Zealand Australia and Hong Kong is not that easy to obtain discharge for bankruptcy

- 1048630 Singaporeans know that they cannot use bankruptcy to shield themselves from creditors and if they become bankrupt it will not be easy for them to obtain discharge from bankruptcy

Is Singapore Taking the Right Approach under Section 125 BA 34 cases of application filed by creditors to prohibit the OA from issuing the Certificate of Discharge ndash none

allowed by the High Court Of the 7997 certificates issued as at 31 Dec 2001 only 37 or 046 of the bankrupts discharged entered

into second bankruptcy This shows that the OA has adopted the right criteria in exercising his discretion to discharge bankrupts

WAYS BY WHICH A BANKRUPT CAN GET OUT OF BANKRUPTCY1 1048729 By making 100 payment of his debts (Sections 123 amp 123A) =gt annulment of bankruptcy order

Courtrsquos power to annul bankruptcy order123 mdash(1) The court may annul a bankruptcy order if it appears to the court that mdash (a) on any ground existing at the time the order was made the order ought not to have been made (b) to the extent required by the rules both the debts and the expenses of the bankruptcy have all since the making of the order either been paid or secured for to the satisfaction of the court (c) proceedings are pending in Malaysia for the distribution of the bankruptrsquos estate and effects amongst the creditors under the bankruptcy law of Malaysia and that the distribution ought to take place there or

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(d) a majority of the creditors in number and value are resident in Malaysia and that from the situation of the property of the bankrupt or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy law of Malaysia (2) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy (3) Where a court annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall vest in such person as the court may appoint or in default of any such appointment revert to the bankrupt on such terms as the court may direct (4) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment of bankruptcy order by certificate of Official Assignee where debts and expenses fully paid123A mdash(1) The Official Assignee may issue a certificate annulling a bankruptcy order if it appears to the Official Assignee that to the extent required by the rules the debts which have been proved and the expenses of the bankruptcy have all since the making of the order been paid (2) Notice of every certificate of annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon an application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment made or other things duly done by or under the authority of the Official Assignee or by the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (6) The court may include in its order such supplemental provisions as may be authorised by the rules

2 1048729 By making offer of composition or scheme of arrangement (Section 95A)

Offer of arrangement for some reason you want to prefer certain creditorso eg X took some money from some charitable organisationo and there were also banks asking for $ against hero what can be done is to put to the creditors that she would pay 100 to the charitable organisation

and the rest to share the remaining pari passu

Annulment of bankruptcy order by certificate of Official Assignee where composition or scheme accepted by creditors95A mdash(1) Where a composition or scheme is accepted by the creditors by a special resolution under section 95 the Official Assignee may annul the bankruptcy order by issuing a certificate of annulment (2) Notice of every annulment under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (3) The Official Assignee shall upon the application of a bankrupt or his creditor or any other interested person issue to the applicant a copy of the certificate of annulment upon the payment of the prescribed fee (4) A certificate of annulment issued under subsection (1) shall be binding on all the creditors so far as it relates to any debts due to them from the bankrupt and provable in bankruptcy (5) The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested and any contravention of or failure to comply with an order of the court made on such an application shall be deemed to be a contempt of court (6) If default is made in payment of any instalment due under the composition or scheme or if the court is satisfied that the composition or scheme cannot in consequence of legal difficulties or for any sufficient cause proceed without injustice or undue delay to the creditors or to the bankrupt or that the acceptance of the proposal by the creditors was obtained by fraud the court may if it thinks fit on an application by the Official Assignee or any creditor annul the composition or scheme by revoking the certificate of annulment but without prejudice to the validity of any sale disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme (7) Where the Official Assignee annuls a bankruptcy order under this section any sale or other disposition of property payment duly made or other things duly done by or under the authority of the Official Assignee or by

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

the court shall be valid except that the property of the bankrupt shall revert to the bankrupt or on an application by any person interested vest in such person as the court may appoint and on such terms as the court may direct (8) The court may include in its order such supplemental provisions as may be authorised by the rules

Annulment By Composition Or Scheme Of Arrangement (Section 95a) ndash see diag- Official Assignee issues Certificate of Annulment- Service of proposal to creditor- Creditors consider proposal amp reply in writing within 21 days- If creditors accept proposal by special resolution

(A majority of creditors in number representing more than 75 of the proved debts) If creditors reject and no special resolution proposal fails

- Offer of composition offer X of the debt that I owe to youhellip offer of composition must be offered to ALL the creditors no one to be preferred

- ==gt NB the acceptance of the composition or scheme by the creditors [s95 BA] is a condition precedent to the OArsquos annulment of the bankruptcy by a certificate [s95A BA]

Procedure- Bankrupt makes proposal for CompositionScheme of Arrangement through the OA - Service of proposals to creditors who have proved debt- Creditors upon receipt of proposal will have 21 days to reply

o 2 types of meetingo general meeting of creditors - meeting to be summoned by OA with not less than 21

daysrsquo notice [s95(2) BA] resolution in writing

- special resolution to be sought by OA giving 21 days reply [s95(3) BA]- the law provides that if the creditor does not reply within 21 days he is deemed to have accepted the

proposal [section 2161]

- If creditors accept proposal by special resolution ie majority in number and at least frac34 in vale of creditors who have proved their debts (those not present taken to have consented)

- If Creditors reject and no special resolution proposal fails

- Must have majority in number and this majority must constitute 75 - ie ldquoa majority in number of at least three-fourths in value of the creditors who have proved their debtsrdquo

[see s95(8) BA]o eg there are 5 creditors owed $100000

- and 3 vote for ithellip there must be at least $75000 among the 3- this of course is for situations when there is no certification of annulment by the Registrar

3 1048729 By applying to the Court for discharge (Section 124)- most common- OA makes the application in maj of cass once satisfied when administration is done- Inso me cases bankrupt himself applies- But rarely done because if OA hasnrsquot finished admin will state so in report (obliged to makereport) report

will state tt still has left in aminidstration of assets- Court will normally not make discharge in such a case

Discharge by court124 mdash(1) The Official Assignee the bankrupt or any other person having an interest in the matter may at any time after the making of a bankruptcy order apply to the court for an order of discharge (2) Every such application shall be served on each creditor who has filed a proof of debt and on the Official Assignee if he is not the applicant and the court shall hear the Official Assignee and any creditor before making an order of discharge (3) Subject to subsection (4) on an application under this section the court may mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him absolutely or (c) make an order discharging him subject to such conditions as it thinks fit to impose including conditions with respect to mdash

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(i) any income which may be subsequently due to him or (ii) any property devolving upon him or acquired by him after his discharge as may be specified in the order (4) Where the bankrupt has committed an offence under this Act or under section 421 422 423 or 424 of the Penal Code (Cap 224) or upon proof of any of the facts mentioned in subsection (5) the court shall mdash (a) refuse to discharge the bankrupt from bankruptcy (b) make an order discharging him subject to his paying a dividend to his creditors of not less than 25 or to the payment of any income which may be subsequently due to him or with respect to property devolving upon him or acquired by him after his discharge as may be specified in the order and to such other conditions as the court may think fit to impose or (c) if it is satisfied that the bankrupt is unable to fulfil any condition specified in paragraph (b) and if it thinks fit make an order discharging the bankrupt subject to such conditions as the court may think fit to impose (5) The facts referred to in subsection (4) are mdash (a) that the bankrupt has omitted to keep such books of accounts as would sufficiently disclose his business transactions and financial position within the 3 years immediately preceding his bankruptcy or within such shorter period immediately preceding that event as the court may consider reasonable in the circumstances (b) that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent (c) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation (proof whereof shall lie on him) of being able to pay it (d) that the bankrupt has brought on or contributed to his bankruptcy by rash speculations or extravagance in living or by recklessness or want of reasonable care and attention to his business and affairs (e) that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him (f) that the bankrupt has within 3 months preceding the date of the bankruptcy order when unable to pay his debts as they became due given an undue preference to any of his creditors (g) that the bankrupt has in Singapore or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors (h) that the bankrupt has been guilty of any fraud or fraudulent breach of trust (i) that the bankrupt has within 3 months immediately preceding the date of the bankruptcy order sent goods out of Singapore under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction (j) that the bankruptrsquos assets are not of a value equal to 20 of the amount of his unsecured liabilities unless he satisfies the court that the fact that the assets are not of a value equal to 20 of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot firstly be held blamable (k) that the bankrupt has entered into a transaction with any person at an undervalue within the meaning of section 98 (l) that the bankrupt has given an unfair preference to any person within the meaning of section 99 and (m) that the bankrupt has made a general assignment to another person of his book debts within the meaning of section 104 (6) The court may at any time before an order of discharge takes effect rescind or vary the order

- Application to the Court can be made by Bankrupt The Official Assignee Any interested party

- Application served on creditors who have proved debt and OA (ie if OA not applicant)- Hearing in Court

The court considers the report of the OA (ie ldquohears the OA and any creditor before making orderrdquo[s124(2) BA] and all other relevant affairs and conduct under s124 BA

- Bankrupt has not committed any offences under S421-424 of the Penal Code THE COURT MAY Grant a conditional discharge ndash rarel usu means tt admin not completed so cannot be

diwcahged anyway Diff for OA because need to monitor the case and may aks for info and bankrupt may claim tt already discharged on condition =gt practical difficulties

Grant an absolute discharge Dismiss application

- Bankrupt has committed offence under S421-424 of the Penal Code THE COURT MAY Grant a discharge subject to payment of 25 dividend or may impose other terms

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

The Court may give an absolute discharge if it is satisfied that bankrupt is unable to comply with above

o Possible condition ndash payment of a certain amount every montho S421-424 Penal Code ndash Fraud related offences

Dishonest or fraudulent removal or concealment of property to prevent distribution among creditors421 Whoever dishonestly or fraudulently removes conceals or delivers to any person or transfers or causes to be transferred to any person without adequate consideration any property intending thereby to prevent or knowing it to be likely that he will thereby prevent the distribution of that property according to law among his creditors or the creditors of any other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonestly or fraudulently preventing a debt or demand due to the offender from being made available for his creditors422 Whoever dishonestly or fraudulently prevents any debt or demand due to himself or to any other person from being made available according to law for payment of his debts or the debts of such other person shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent execution of deed of transfer containing a false statement of consideration423 Whoever dishonestly or fraudulently signs executes or becomes a party to any deed or instrument which purports to transfer or subject to any charge any property or any interest therein and which contains any false statement relating to the consideration for such transfer or charge or relating to the person or persons for whose use or benefit it is really intended to operate shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

Dishonest or fraudulent removal or concealment of property or release of claim424 Whoever dishonestly or fraudulently conceals or removes any property of himself or any other person or dishonestly or fraudulently assists in the concealment or removal thereof or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment for a term which may extend to 2 years or with fine or with both

DISCHARGE BY THE COURT UNDER S124 ndash

Re Siah Ooi Choe [1998]1 Slr 903- 1048729 Siah Ooi Choe a prominent businessman in manufacturing multi-layed plastic film was made a

bankrupt during the recession in 1986- 1048729 total liability $140m- 1048729 made regular instalments payment into his estate and proposed to sell his flat to settle his debts ndash total

contribution $479000- 1048729 The bankrupt applied to the Court for discharge in 1997 when he was 50 years old and a diabetic

(relevant pts considered by the court)- 1048729 Majority of creditors objected

- 1048729 Warren Khoo J held that there was no reason for a refusal to discharge the bankrupt because 1048729 the bankrupt was 50 years old and a diabetic 1048729 he paid regular instalments into his estate 1048729 he sold his flat to raise funds to settle his debts (which he ws not obliged to do) 1048729 the cause of bankruptcy was economic downturn (as opposed to mismanagement of funds

for eg ndash courts more sympathetic to such causes where merely bad luck) 1048729 he co-operated fully with the Official Assignee (ie provided info fully when asked to do so

and when asked for opinion frank and x try to hide things) OA pays a lot of attention to this

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

Re Jeyaretnam Joshua Benjamin ex parte Indra Krishnan (No 2) [2004] 3 SLR 133- Facts

This was an appeal against the assistant registrarrsquos dismissal of the appellantrsquos application to have a bankruptcy order against him discharged under s 124 of the Bankruptcy Act

- 2 grounds of appeal The appellant offered to pay up to 20 of the debt but was willing to increase it to 25

if ordered by the court He alleged that the real reason for the objection to his application was a political one (ie

that they did not want him to recover his seat in Parliament) - bull Counsel for opposing creditors submitted that the appellant had suppressed vital information on his

assets from the OA namely his interests and entitlement in a Johor Bahru property which were being disputed by other claimants and beneficiaries to his sisterrsquos estate

- bull The OA also objected and submitted that the appellant had been uncooperative - Held

The administration of the appellantrsquos assets had not been completed The appellantrsquos claims in Johor Bahru were being disputed and there was a serious threat of litigation In the circumstances it would not be fair to thecreditors if the bankruptcy order was discharged

In the present circumstances 3 years was too soon for the bankruptcy order to be discharged although it might have been different if the assets had been fully ascertained and administered and the OA was supportive of the application to discharge

- Property claimed by debtor and happened to be quite large (landed bungalow in johor bahru)- Case stil under admin

4 1048729 By obtaining a Certificate of Discharge from the Official Assignee (Section 125)

Discharge by certificate of Official Assignee125 mdash(1) The Official Assignee may in his discretion and subject to section 126 issue a certificate discharging a bankrupt from bankruptcy (2) The Official Assignee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless mdash (a) a period of 3 years has lapsed since the date of commencement of the bankruptcy and (b) the debts which have been proved in bankruptcy do not exceed $500000 or such other sum as may be prescribed see mdash Bankruptcy (Variation of Sum of Debts under section 125 (2) (b)) Rules 1999 (S 12699) (3) Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper (4) The Official Assignee shall upon the application of a bankrupt or his creditor or other interested person issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee

Objection by creditor to discharge of bankrupt under section 125126 mdash(1) Before issuing a certificate of discharge under section 125 the Official Assignee shall serve on each creditor who has filed a proof of debt a notice of his intention to discharge the bankrupt together with a statement of his reasons for wanting to do so (2) A creditor who has been served with a notice under subsection (1) and who wishes to enter an objection to the Official Assignee issuing a certificate discharging the bankrupt may within 21 days from the date of the Official Assigneersquos notice furnish the Official Assignee a statement of the grounds of his objection (3) A creditor who does not furnish to the Official Assignee a statement of the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge (4) A creditor who has furnished the Official Assignee with a statement of the grounds of his objection in accordance with subsection (2) may within 21 days of being informed by the Official Assignee that his objection has been rejected make an application to the court for an order prohibiting the Official Assignee from issuing a certificate (5) Every application under subsection (4) shall be served on the Official Assignee and on the bankrupt and the court shall hear the Official Assignee and the bankrupt before making an order on the application (6) On an application made under subsection (4) the court may if it thinks it just and expedient mdash (a) dismiss the application (b) make an order that the bankrupt be not granted a certificate of discharge by the Official Assignee for a period not exceeding 2 years or

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

(c) make an order permitting the Official Assignee to issue a certificate discharging the bankrupt but subject to such conditions as the court may think fit to impose including conditions with respect to mdash (i) any income which may be subsequently due to the bankrupt after his discharge or (ii) any property devolving upon the bankrupt or acquired by him after his discharge as may be specified in the order

Statutory conditions to be complied with- bull A period of three (3) years have elapsed since the date of bankruptcy- bull Debts which have been proved in bankruptcy do not exceed $50000000

person may have certain claim more than 05 million but OA may reject the debts so if in the end debts are accepted and less than half million then will be discharged

- bull The Official Assignee may in his discretion issue a Certificate discharging a bankrupt from bankruptcy

Factors which the official assignee will consider in granting a certificate of discharge- bull The cause of the bankruptcy- bull The age of the bankrupt and the number of years he has been in bankruptcy- bull The bankruptrsquos conduct in bankruptcy- bull His assets and contributions to the bankruptcy estate- bull The extent of his co-operation with the Official Assignee- bull The interest of all parties including public interest

Re ng lai watFactsThe Housing and Development Board (HDB) obtained judgment in default of appearance against Ng After receiving no satisfaction on the judgment HDB issued a bankruptcy notice against Ng and obtained adjudication and receiving orders against him On 15 July 1995 the new Bankruptcy Act 1995 (Cap 20 1996 Ed) (lsquothe Actrsquo) came into operation and the Official Assignee (OA) in the exercise of his powers under s 125 of the Act selected Ng as a suitable candidate for discharge by certificate HDB then applied under s 126(4) of the Act for the following orders (a) an order prohibiting the OA from issuing the certificate of discharge to Ng pursuant to s 125 of the act in the alternative (b) an order that the certificate of discharge be subject to the condition that the HDB be entitled to the net proceeds of sale of Ngrsquos share of theproperty in the event that Ng sold or divested his share and interest in the flat after his discharge

Held allowing the appeal(1) The sale proceeds of Ngrsquos flat would not be divisible amongst his creditors because s 78(2)(d) of the Act excluded from the definition of property divisible among a bankruptrsquos creditors property of the bankrupt which was excluded under any other written law This meant that Ngrsquos flat was not available for distribution by the OA Looking at s 51 of the HDB Act (Cap 129) it was clear that no HDB flat shall be attached in execution of a decree of any court(2) A conditional release of Ng would be tantamount to the HDB as creditor circumventing the HDB Act and attempting to obtain indirectly what it could not do directly A conditional release of Ng would also contravene s 78(2)(d) of the Act It would be a strange anomaly if the lsquohands ofrsquo principle on creditors for HDB flats prevailing at the time of bankruptcy did not apply when the bankrupt was being discharged from bankruptcy There was no reason why a discharged bankrupt should be worse off than one who remained a bankrupt(3) It would be a grave injustice to Ng for the court to treat the HDB differently from any other unsecured creditors The decision of the court below was set aside and the OArsquos appeal was allowed with costs

DISCHARGE UNDER THE NEW BANKRUPTCY REGIMERe Ng Lai Wat1

ONE of the important reforms introduced by the new Bankruptcy Act2 (lsquotheActrsquo) is that the Official Assignee has the power to issue a certificatedischarging a bankrupt from bankruptcy in certain circumstances3 Acreditor of the bankrupt may object to this and if his objection is rejectedby the Official Assignee he may make an application to the Court4 TheCourt is given wide powers to deal with such an application One of theorders it may make is to permit the issue of the certificate but subject tosuch conditions as it thinks fit including conditions with respect to anyincome which may be subsequently due to the bankrupt after his discharge

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

or any property devolving upon the bankrupt or acquired by him after hisdischarge5In Re Ng Lai Wat the Singapore High Court had to deal with such anapplication by a bankruptrsquos creditor for the first time and incidentally ona rather interesting set of facts Ng had been bankrupt for more than 6 years6his main debt being a judgment debt owed to the Housing DevelopmentBoard (lsquoHDBrsquo) Ng also had a share in an HDB flat the value of whichhad appreciated from the original purchase price of $35000 to $135000The Official Assignee decided to discharge Ng unconditionally and HDBapplied to the Court objecting to this The Deputy Registrar decided thatthe certificate of discharge should be made subject to the condition that1 [1996] 3 SLR 1062 Cap 20 1996 Ed The Act came into force on 15 July 19953 See s 125 of the Act A period of 5 years must have lapsed since the commencement ofbankruptcy (ie the date of the bankruptcy order see s 75 of the Act) and the provable debtsof the bankrupt must not exceed $1000004 See s 126 of the Act5 S 126(6)(c) of the Act The Court may also dismiss the application or order that no certificateof discharge be granted by the Official Assignee for a period not exceeding two years s126(6)(a) (b)6 He was made bankrupt under the repealed Bankruptcy Act but pursuant to the transitionalprovisions in s 167(3) and para 1(1) of the First Schedule the present Act applied to himas if he had become a bankrupt thereunder568 Singapore Journal of Legal Studies [1996]upon sale or transfer of the flat Ng must use his share of the sale proceedsto satisfy the debt owed to HDB Lai Siu Chiu J allowed the OfficialAssigneersquos appeal and allowed the grant of an unconditional certificate ofdischarge

The General ApproachThe Official Assignee made the somewhat bold submission that he hadan absolute and unfettered discretion to issue a certificate of discharge andthat the Court ought not to intervene in the exercise of such discretion exceptfor very good reasons This was apparently rejected by the learned Judgewho pointed out that section 126 of the Act lsquodoes not contain qualifyingwords to the effect that the Court can interfere with the OArsquos decision onlyif the decision is reasonablersquo7The position taken by the learned Judge was clearly correct It is truethat if a bankrupt or any of his creditors apply to the Court against an actomission or decision of the Official Assignee in relation to theadministration of the bankruptrsquos estate8 the Court will not intervene unlessthere was bad faith or absurdity9 or if the Official Assignee did not addressthe correct question or made errors of law or failed to take into accountrelevant matters or took into account irrelevant matters10 For if the OfficialAssignee has to answer at every step for the exercise of his discretionadministration of the bankruptcy would be impossible11 However the contextis entirely different when the Official Assignee is considering whether togrant a discharge It is the exercise of a power which is determinative ofthe creditorsrsquo substantive rights and is probably more akin in nature to aquasi-judicial act such as a decision to reject a proof of debt than anadministrative decision as to the conduct of the bankruptcy In examiningthe validity of a proof12 the Official Assignee acts in a quasi-judicial capacityin accordance with standards no less than the standards of a Court or Judge137 Supra note 1 at 119C8 S 31(1) of the Act9 Re Peters ex parte Lloyd (1882) 47 LT 64 at 65 Re a Debtor [1949] Ch 236 at 241 ReHall (1957) 20 ABC 21 at 29 Re Carson (1960) 19 ABC 108 at 121 Stone v Angus [1994]2 NZLR 202 at 204-510 See in the context of applications against an act omission or decision of a liquidator under

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

the materially similar provision in s 315 of the Companies Act (Cap 50 1994 Ed) Re EquityFunds Of Australia (1976) 2 ACLR 23811 See Re a Debtor supra note 9 at 241 Re Carson supra note 9 at 121 Re Valibhoy [1995] 1SLR 601 at 61412 See r 197(1) of the Bankruptcy Rules13 See in the context of a liquidatorrsquos duty in examining a proof under the similar r 92 ofthe Companies (Winding Up) Rules Tanning Research Laboratories Inc v OrsquoBrien (1990)169 CLR 332 at 338-9 Re Magic Aust Pty Ltd (1992) 7 ACSR 742 at 745SJLS Comments 601SJLS Comments 569Consequently an appeal to the Court against the Official Assigneersquosdecision to reject a proof14 probably takes the form of a de novo hearing15It is therefore suggested that the Court in hearing an application againstthe Official Assigneersquos decision to issue a certificate of discharge maysimilarly consider all the circumstances in coming to a decision Of courseat the same time the Court should have due regard to the views of theOfficial Assignee in relation to aspects such as the conduct and attitudeof the bankrupt during the bankruptcy and his suitability to recommencetrading

Factors Relevant to Grant of a DischargeThe learned Judge very helpfully set out some pertinent factors which theCourt may consider in balancing the interests of the bankrupt with thoseof his creditors to determine whether the bankrupt should be dischargedand if so whether conditionally or unconditionally These were the causeof the bankruptcy the bankruptrsquos conduct relevant to his bankruptcy aswell as after his bankruptcy the interests of the public and commercialmorality16 While this list of factors was probably not intended to be exhaustiveit is noteworthy that none of the listed concerns had any direct bearingon the interests of the bankruptrsquos creditors This commentator wouldrespectfully suggest that considerations such as the extent to which thebankruptrsquos creditors have been paid off and the total amount of debt stilloutstanding would have deserved a place on the list It may be inferredfrom the overall purposes attaching to the bankruptcy law that the Courtshould be mindful of the question whether the creditors have been enabledto recover all that might reasonably be made forthcoming to them throughthe bankruptcy17 In this connection it may be useful to note that in thecase of a discharge by the Court the Court is less likely to make an orderof discharge if it is shown that the bankruptrsquos assets are worth less than20 of the amount of his unsecured liabilities unless this deficiency arisesfrom circumstances for which he cannot be held blamable18 After 6 years14 R 198(1) of the Bankruptcy Rules15 See in the context of liquidation Re Kentwood Constructions Ltd [1960] 1 WLR 646 ReTrepca Mines Ltd [1960] 1 WLR 1273 Tanning Research Laboratories Inc v OrsquoBrien supranote 13 at 340-1 See also Watta Battery Industries Sdn Bhd v Uni-Batt ManufacturingSdn Bhd [1993] 1 MLJ 149 at 159 The right of appeal in liquidation is given by r 93 ofthe Companies (Winding Up) Rules which is substantially similar to r 198(1) of theBankruptcy Rules16 Supra note 1 at 118H17 Fletcher The Law of Insolvency (Second Ed 1996) at 31318 S 124(4) read with s 124(5)(j) of the Act602 Singapore Journal of Legal Studies [1996]570 Singapore Journal of Legal Studies [1996]of bankruptcy Ng had paid only $5800 of HDBrsquos judgment debt of$7581888 on average this worked out to a monthly payment of approximately$80 Surely this fact warranted at least an express reference by theCourt in exercising its discretion though of course it would still have beenperfectly entitled after consideration of all the circumstances of the caseto conclude that Ng ought to be discharged

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

An argument was made by HDB that the fact that Ngrsquos bankruptcy wasdue to business failure rather than fraudulent or criminal acts was relevantThis contention was rightly rejected by Lai Siu Chiu J as it is difficultto see in what way it assisted HDBrsquos case against an unconditional dischargeHowever the Courtrsquos rejection of the argument may have been couchedin overly extensive terms the learned Judge held that the fact that the causeof bankruptcy was business failure and not fraudulent or criminal acts shouldnot make any difference to the way the Official Assignee ought to exercisehis discretion in issuing a certificate of discharge19 Surely whether thebankrupt has engaged in fraudulent or criminal acts leading to his bankruptcyhas at least some measure of relevance to the factors for discharge inparticular his suitability to recommence business20 and the protection ofthe public and commercial morality More importantly section 124(4) and(5) of the Act explicitly places a higher burden on a bankrupt seeking adischarge from the Court where inter alia he has committed an offence under the Act or under sections 421 422 423 or 424 of the Penal Code21or where he has been guilty of any fraud or fraudulent breach of trust22While these provisions relate to the case of a discharge by the Court theyshould apply equally to the exercise of the Official Assigneersquos discretionin respect of a certificate of discharge

The Main IssueThe issue which preoccupied the Court was the condition on the certificateof discharge It was not disputed that conditions should not be imposedon a certificate of discharge such that the bankrupt could not improve hisposition in life or make a fresh start23 What was in dispute was the specificissue of whether in the light of section 51 of the Housing and Development19 Supra note 1 at 116F-G20 See Re Cook (1889) 6 Morr 224 at 233 Morgan v White (1912) 15 CLR 1 at 15-6 Seealso Re Kolomy (1982) 56 FLR 157 and the authorities discussed therein21 Cap 224 These sections deal with dishonest or fraudulent acts committed for the purposeof putting onersquos assets beyond the reach of creditors22 See s 124(4) and s 124(5)(h) of the Act23 On this see also Re James (1891) 8 Morr 19SJLS Comments 603SJLS Comments 571Board Act24 (lsquoHDB Actrsquo) a condition could be imposed that in the eventthat Ngrsquos HDB flat is sold or transferred the proceeds should be madeavailable to his creditors The relevant part of section 51 provides that anHDB flat shall not vest in the Official Assignee on the bankruptcy of theowner and shall not be attached in execution of a decree of a CourtLai Siu Chiu J gave two reasons for her view that the condition couldnot be sustained25 Firstly since Ngrsquos flat was protected from attachmentin execution of a decree of a Court the condition was tantamount to HDBcircumventing the HDB Act and attempting to obtain indirectly what it couldnot obtain directly Secondly section 78(2)(d) of the Act provides that abankruptrsquos property which is excluded under any written law shall notcomprise property which is divisible among the bankruptrsquos creditors Readwith section 51 of the HDB Act this established a lsquohands-offrsquo principleon creditors in respect of a debtorrsquos HDB flat whether the debtor was inbankruptcy or being discharged from bankruptcyNeither of these reasons are without difficulty The premise upon whichboth reasons were founded was that the proceeds resulting from a sale ortransfer of Ngrsquos flat were not to be distinguished from the flat itself Thisis doubtful On a reading of the relevant statutory provisions it is notapparent that the privilege of immunity from attachment in respect of anHDB flat extends to the proceeds upon its sale or transfer Indeed it mayplausibly be argued that the basis for the immunity is that since HDB flatsare publicly-subsidised and meet a most basic social need26 it would be

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

unfair to society as a whole and harsh to the flat-owner if an HDB flatwere to be made available to satisfy his creditorsrsquo claims If so there isno justification for extending the immunity to the proceeds received uponthe sale or transfer of an HDB flat Further what if a bankrupt sells hisHDB flat while he is still bankrupt Upon the learned Judgersquos analysisthe result would be that the bankrupt will be fully entitled to use the proceedsas he wishes and what appears to be a most unlikely and ill-advised thingfor a bankrupt to do takes on a wholly different flavour This hardly seemsequitable surely the proceeds of such a sale should be divisible amonghis creditors The case should fall squarely within the terms of section78(1)(a) of the Act which provides that the property of a bankrupt which24 Cap 12925 See supra note 1 at 119H-120A26 Similarly the Central Provident Fund fulfils a fundamental social necessity and an employeersquosCentral Provident Fund moneys and contributions are rendered immune from attachmentand vesting in the Official Assignee upon bankruptcy see s 25 Central Provident FundAct (Cap 36 1991 Ed) See also s 31 of the Post Office Saving Bank of Singapore Act(Cap 237)604 Singapore Journal of Legal Studies [1996]572 Singapore Journal of Legal Studies [1996]is divisible among his creditors includes all property which is acquired byhim before his dischargeOn the other hand when one considers the possibility of compulsoryacquisition with which the learned Judge was understandably concernedher Honourrsquos approach has its merits If Ngrsquos flat was subsequentlycompulsorily acquired by the government for which he receives compensationit would be repugnant if he had to surrender the compensation moneysto his creditors pursuant to the condition on the certificate of discharge27Though such a contingency could have been adequately met on the factsof Ngrsquos case by an appropriate variation of the terms of the conditiona more problematic issue arises if an HDB flat is compulsorily acquiredwhile the flat-owner is in bankruptcy The effect of the relevant statutoryprovisions as argued above would be that the compensation moneys paidto the bankrupt would become divisible among his creditors This wouldbe seriously prejudicial to the bankrupt since he would have been forciblydeprived of his statutory immunity against attachment of his HDB flatAlthough this point was not discussed by the learned Judge her Honourmay well have been influenced by this consideration in concluding thatthe proceeds upon the sale or transfer of an HDB flat could not be dividedamong the flat-ownerrsquos creditors However on balance it is submitted withrespect that it would been more logical and more faithful to the statutoryprovisions to hold to the contrary The problems connected with thecompulsory acquisition of a bankruptrsquos HDB flat should be left to beaddressed by legislative remedial actionA further point may be made with reference to her Honourrsquos relianceon the statutory immunity of an HDB flat from attachment in executionof a decree of a Court pursuant to section 51 of the HDB Act and herview that the condition on the certificate of discharge constituted anoutflanking of such immunity It is unfortunate that the recent decisionof the Court of Appeal in Central Provident Fund Board v Lau Eng Mui28was not highlighted in connection therewith In Lau Eng Mui the Courtof Appeal considered section 25(1) of the Central Provident Fund Act29(lsquoCPF Actrsquo) the material part of which provides that moneys in a CPFaccount shall not be lsquoliable to be attached sequestered or levied upon forin respect of any debt or claim whatsoeverrsquo The question was whether27 Supra note 1 at 116C-F Her Honour also felt that the same point may be made to a lesserdegree with respect to the possibility of en-bloc upgrading of Ngrsquos flat he should not belsquopenalisedrsquo for the increase in the value of the flat resulting therefrom when he sells Withthe greatest respect this writer does not see the injustice

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

28 [1995] 3 SLR 109the Court in exercising its power under section 106 of the Womenrsquos Charter30to order the division of matrimonial assets when granting a decree of divorcejudicial separation or nullity of marriage could order that the wifersquos shareof the matrimonial assets be satisfied from a portion of the husbandrsquos CPFmoneys It was held that such a lsquoproprietary orderrsquo could be made despitesection 25(1) of the CPF Act as inter alia such an order did not amountto an attachment sequestration or levy on CPF moneys Moreover alsquoproprietary orderrsquo could be made notwithstanding that it imposed a chargeon the CPF moneys the embargo against enforcement did not prohibit thecreation of such a charge The Court of Appeal also expressly followedthe decision in Re Sandrasagram31 that the vesting of a bankruptrsquosproperty in the Official Assignee upon bankruptcy was not an attachmentsequestration or levy within the meaning of a materially identical provisionin respect of the Singapore Municipal Provident FundApplying the reasoning of these cases it would seem that the provisionin section 51(3) of the HDB Act that an HDB flat shall not be attachedin execution of a decree of a Court does not prevent it from vesting inthe Official Assignee upon the flat-ownerrsquos bankruptcy This is probablywhy an express provision to the latter effect is found in section 51(2)32A fortiori section 51(3) should not have any bearing on the type ofconditions which are permissible to be imposed on a certificate of dischargeit is thus not easy to see how the condition on the certificate of dischargein Ngrsquos case operated to circumvent the operation of section 51(3)Certainly following Lau Eng Mui the fact that the condition amountedto a charge on Ngrsquos flat33 does not result in a contravention of section 51(3)either in wording or spirit Further the claim of a creditor against his bankruptdebtor clearly cannot be given any less precedence than the claim as inLau Eng Mui of one spouse against another in matrimonial proceedingsConcluding NoteThe ultimate question is where did the justice of Ngrsquos case lie Hopefullyit has been demonstrated that there is no convincing legal or policy groundfor completely insulating the proceeds of sale of Ngrsquos HDB flat if andwhen he sells it from the reaches of his creditor As a matter of fairnessit is difficult to see why Ng should reap the rewards of the appreciation30 Cap 35331 [1935] MLJ 247 See also Re Hendricks [1936] MLJ 89 and Re Monteiro [1949] MLJ 18532 S 25(4) of the CPF Act is a similar express provision prohibiting the vesting of CPF moneysin the Official Assignee upon the bankruptcy of a CPF member33 Lai Siu Chiu J appeared to lay some emphasis on this fact see supra note 1 at 116C606 Singapore Journal of Legal Studies [1996]574 Singapore Journal of Legal Studies [1996]in value of his HDB flat while his creditor remains unpaid The HDB Actguarantees an HDB flat-owner that he will never be forcibly evicted fromhis home by his creditors it should not assure him that he can realise andenjoy the incidental capital gains without having to account for his debtsOn the other hand the condition imposed by the Deputy Registrar wasoppressive to Ng in one respect no time limit had been imposed with respectto the operation of the condition If Ng had not been made bankrupt theLimitation Act34 would have barred the enforcement of the HDBrsquos judgmentdebt after 12 years35 Ng would have been at liberty to sell his HDB flatafter this period had elapsed without fear of being compelled to surrenderthe proceeds to satisfy the judgment debt Surely he cannot be put in aworse position in his bankruptcy The operation of the condition shouldhave been limited in time to a period of 12 years from the date of thejudgment discounting the period of the bankruptcy itself36 This courseit is respectfully suggested would have achieved the proper balance betweenthe respective interests of the partiesLEE ENG BENG

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA

34 Cap 16335 S 6(3) of the Limitation Act36 Since time under the Limitation Act stops running upon the making of the bankruptcy order in respect of a claim which is recoverable in the bankruptcy see Re Westby (1879) 10ChD 776 at 784 Re Crosley (1887) ChD 266 Re Benzon [1914] 2 Ch 68 at 75 Cotterell v Price [1960] 3 All ER 315

ProcedureREADY FOR DISCHARGE- Notice to all proven creditors by OA of intention to discharge and reasons

Creditors have no objections of notice [NB no reply within 21 days deemed to have consented - see s126(3) BA

Objections are raised and filed within 21 days of notice Objections are accepted No discharge Objections are rejected

If OA rejects reasons for objection creditor may apply to Court to prohibit OA from issuing certificate

OR Creditor does not proceed further- The Court may impose conditions for discharge If fulfilled - Dismiss application - Suspend discharge for two years=gt DISCHARGED BY CERTIFICATE

CONTENTS OF CREDITORrsquoS OBJECTION- 1048729 If no information is given by the objecting creditor except for a bare statement that he has not been paid

his objection will in all likelihood be rejected because dividend most likely not paid

- 1048729 The Official Assignee will not exercise his discretion to discharge if the objecting creditor provides the Official Assignee with information pertaining to assets of the bankrupt or other relevant information that enables the Official Assignee to administer the case further

• CAUSES OF BANKRUPTCY
• Consideration and implementation of debtorrsquos proposal
• Qualifications of a Trustee in Bankruptcy - s34
• Difference between creditorrsquos and debtors petition
• Jurisdiction of HC [s60 BA]
• • Illustration
  • Form 1 ndash
  • • Legal moratorium
    • • BANKRUPTCY OFFENCES
      • • Is Singapore Taking the Right Approach under Section 125 BA