FAQs ON INDIVIDUAL INSOLVENCY AND DEBT REPAYMENT SCHEME UNDER THE INSOLVENCY, RESTRUCTURING AND DISSOLUTION ACT 2018 (“IRDA”)
When will the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) take effect?
The IRDA takes effect on 30 July 2020 and will apply to Bankruptcy Applications filed on or after 30 July 2020. In respect of Bankruptcy Applications filed before 30 July 2020, the relevant provisions under the Bankruptcy Act will continue to apply.
Why must a secured creditor notify the Official Assignee of the secured creditor’s intention to claim interest within 30 days after the making of a bankruptcy order under section 327(4) of the IRDA?
This enables the bankrupt’s assets and liabilities to be ascertained earlier with greater clarity and facilitates the overall administration of the bankruptcy estate. This provision does not affect the requirement that the secured creditor realises the security within the period of 12 months.
Why is a creditor allowed to claim and file a proof of debt for the full contractual amount under section 356(2)(a) of the IRDA?
Section 356(2)(a) allows for the full contractual amount to uphold parties' rights that were previously agreed between the parties and will provide an accurate picture of the debts owed by the bankrupt.
This will not apply to claims filed in cases where the Bankruptcy Application was filed before 30 July 2020. For such cases, the rate of interest in accordance with section 94(2)(a) of the Bankruptcy Act will continue to apply.
Will allowing the full contractual amount increase the total amount of debt owed thus affecting the amount that a bankrupt will have to contribute before he may qualify for a discharge?
The total amount of debt owed does not affect the computation of the Monthly Contributions and Total Contribution a bankrupt will have to pay before the bankrupt may qualify for a discharge.
Under the COVID-19 (Temporary Measures) Act (“COVID-19 Act”) which takes effect from 20 April 2020 to 20 October 2020, the monetary threshold for a creditor to commence bankruptcy proceedings against a debtor is increased from $15,000 to $60,000. In view that the IRDA comes into effect on 30 July 2020, which Act will take precedence?
The COVID-19 Act will take precedence over the IRDA for the period from 20 April 2020 to 20 October 2020. However, this period is subject to change. During this relevant period, the monetary threshold for a creditor to commence bankruptcy proceedings against a debtor is $60,000.