(a) In relation to each type of insolvency procedure available in the legal system of this economy, what types of claims of creditors are properly admissible for payment in the context of that procedure? (for example liquidated debts, future debts, contingent claims, secured claims, unliquidated claims for damages, interest claims, costs of administration or of legal proceedings, periodical payments, debts owed by guarantors of the business organization.)

 

In a liquidation and it appears in a judicial management, all debts payable on a contingency and all claims against the company present or future, certain or contingent, ascertained or sounding only in damages are admissible to proof against the company, a just estimate being made so far as possible of the value of such debts or claims as are subject to some contingency or sound only in damages or which for some other reason do not bear a certain value.

(b) At what date are the amounts of admissible debts computed?

 

The amount of admissible debts are computed as at the date of the winding up order or as at the date of the judicial management order.

(c) By what method are claims of creditors proven by those creditors in the context of each type of insolvency procedure?

 

Once a winding up or judicial management has commenced, the liquidator will call on the company's creditors to lodge a proof of debt. The liquidator then assesses the proofs of debt lodged with him. A creditor who is dissatisfied with the decision of the liquidator may appeal to the court.

(d) How are disputed claims made by creditors adjudicated upon? (for example by the administrator, or by a Court.)

 

See sub-para above.

(a) In relation to each type of insolvency procedure available in the legal system of this economy, what principles apply to the division of available assets of the corporate debtor among those of its creditors entitled to payment? Is there a basic principle of equality of payment, or are rights of priority of payment enjoyed by secured creditors, or by certain classes of creditors over others? (for example costs of the administration, claims for taxes owed by the debtor, amounts owed to employees of the organization.)

 

Of the various insolvency procedures, it is only liquidation that is concerned with realising the assets of the company and distributing them to the general body of unsecured cerditors. In a liquidation, the pari passu principle applies and provides that all unsecured creditors share rateably in the assets of the company. This is subject to the following exceptions or apparent exceptions.

Secured debts

Secured creditors need not prove their debts but can realise their security and obtain full satisfaction. If the security is inadequate, they may prove as unsecured creditors for the balance.

Preferential debts

Certain debts have priority over a floating chargeholder and over unsecured creditors. These debts in the order of priority are as follows:

(i) costs and expenses of winding up;

(ii) wages and salaries of employees up to a maximum of five months' salary or S$7,5000 (whichever is less) - the remainder becomes an unsecured debt;

(iii) retrenchment benefits and ex-gratia payments under the Companies Act up to a maximum of S$7,500 - the remainder becomes an unsecured debt;

(iv) compensation to an employee for injuries suffered in the course of employment under the Workmen's Compensation Act;

(v) remuneration in respect of vacation leave;

(vi) taxes; and

(viii) gratuity and retrenchment benefits under the Employment Act.

If there is insufficient assets to pay any class of preferred debts, the debts within the class abate in equal proportions. Thereafter, the debts ranking in subsequent classes and other unsecured creditors will not be paid.

Members

Any residue remaining after payment of all secured, preferred and unsecured creditors will be divided among shareholders. Where there are preference shares, their entitlements or preferences will be in accordance with the terms of issue set out in the Memorandum and Articles of Association. Finally the ordinary shareholder will participate equally in all remaining assets.

 

(b) Give a brief account of the order of priorities, if any, of payment of creditors prescribed by the legal system of this economy.

 

See sub-para above.