SINGAPORE: Some 40 years after judicial management was introduced in Singapore, the process has not always fulfilled its purpose of rescuing beleaguered but viable businesses and preserving their value.
“Too often, it has become a precursor to liquidation, adding time and costs without necessarily achieving meaningful rehabilitation,” said Minister for Law Edwin Tong on Oct 21.
“This is unacceptable,” he added, giving the keynote address at the Singapore Insolvency Conference organised by the Insolvency Practitioners Association of Singapore.
His ministry will amend the Insolvency, Restructuring and Dissolution Act 2018 (Irda) to make it clear that judicial management is a rehabilitative process, with the first reading of the Bill in Parliament slated for later in 2026 or early 2027.
In May, the Law Ministry broadly accepted reform recommendations made in 2025 by the Committee to Enhance Singapore’s Corporate Restructuring and Insolvency Regime, after a public consultation.
Tong stressed that premature liquidation could destroy value and that financial distress does not necessarily mean a business is no longer viable.
“The company may well have a very sound underlying business and good assets, but an unsustainable debt burden or temporary liquidity difficulties.
“And in such a situation, premature liquidation or prolonged administration can destroy them,” said Tong, who is also Second Minister for Home Affairs.
“In a mature economy like Singapore’s, business cycles, ups and downs will be inevitable. They will be recurring, and industries will go through periods of growth and decline.
“We need a stronger restructuring framework to allow businesses to recover and to absorb the shocks of that ebb and flow.”
Under judicial management, control of a financially distressed company is temporarily placed under an independent, court- appointed judicial manager with the aim of keeping the company afloat, or to work out a debt restructuring plan.
The company is protected against lawsuits by creditors during this period.
As part of the amendments to the Irda, applicants for judicial management must be able to explain how the process is expected to rehabilitate the firm or its business, and tangible benefits compared with winding up the firm. — The Straits Times/ANN
