Information for the Creditors of a Company in Liquidation
Information on the status of the liquidation
Where the Official Receiver has been appointed as liquidator, the Official Receiver will send a Summary of Company’s Affairs to contributories and all creditors disclosed in the Statement of Affairs to provide them with an insight of the affairs of the company.
Creditors with any useful information relating to the assets or affairs of the company in liquidation should write in to the Official Receiver for his attention and necessary action.
The Official Receiver will inform the creditors should there be any significant developments of the liquidation. The Official Receiver may also write to or convene a meeting with the creditors to request for their financial support when there are insufficient funds in the Company Liquidation Account for the Official Receiver to take legal or other enforcement action in the recovery of any asset.
Where a private liquidator has been appointed, creditors and contributories may write to them directly for information on the affairs of the company.
Filing a claim or a Proof of Debt
Creditors may file their Proofs of Debt (Form 77) with the liquidator once the company is in liquidation.
Where the Official Receiver has been appointed as the liquidator of the wound up company, she will inform creditors when there are sufficient funds to declare a dividend. A “Notice to file Proof of Debt” will be sent to all creditors who have not filed their claims against the company but were disclosed in the Statement of Affairs.
Creditors who fail to lodge their claims within 14 days from the date of the Notice will be excluded from the dividend payment.
Appeal against rejection of claims
In the event that a creditor’s claim has been rejected partially or fully, a Rejection Notice will be sent to the creditor.
Any appeal against such a rejection must be raised with the liquidator within 21 days from the date of the Notice, failing which the decision of rejection would be made final.
The appellant is required to furnish additional evidence to the liquidator for further consideration i.e. to substantiate why the claim should not be rejected.
How are the assets distributed?
Moneys recovered by the Official Receiver will be first utilised towards payment of costs and expenses incurred in the liquidation.
Any remaining funds will be used to pay the creditors in accordance with their ranking as set out in section 328 of the Companies Act (Cap. 50):
- Preferential Creditors
Those who are entitled to receive payments in priority, such as employees, CPF Board, Comptroller of Income Tax (see section 328 of the Companies Act (Cap. 50)).
- Ordinary Creditors
Any other unsecured creditors, such as trade creditors and sundry creditors who have filed their claims against the company.
Completion of case
Creditors will receive a “Notice to Creditors and Contributories of Intention to Apply for Release” or a “Notice of Intention to Apply for striking off of Company” together with a Summary of Receipts and Payments, when the liquidator intends to apply for his release as liquidator and the dissolution of the company or striking-off of the company.
Any objection to the liquidator’s application for Release or Striking Off must be raised within 21 days from the date of the Notice.
How do I file a Proof of Debt (Form 77)?
Where the Official Receiver is appointed as the liquidator of the wound up company, creditors can file their Proofs of Debt, manually or electronically, to the Official Receiver’s office:
- For online submission, a filing fee of $5.00 is payable. Please click here to submit the Form 77 electronically.
- For manual submission, a filing fee of S$8.00 is payable via SAM machine or cash at our office. To download the Form 77, please click here.
Please submit the supporting documents such as invoices and judgements to the Official Receiver. Please quote the e-filing number (for electronic submission of Form 77) and the winding up number of the company when submitting the supporting documents to the Official Receiver. Proofs of Debt without any supporting documents may be rejected.
In the event that private liquidators have been appointed as the liquidators of the wound up company, please contact them directly for the filing of the Form 77.
Unfair preferences and undervalued transactions
Sections 98 to 103 of the Bankruptcy Act (Chapter 20) will apply in ascertaining whether there are unfair preferences or transactions made at an undervalue.
Transactions at an undervalue
These are transactions where the company received no consideration (e.g. a gift) or where the consideration received was significantly less in monetary value. The transaction must have taken place within five years ending with presentation of winding up application and the company must have been wound up at the time of the transaction or was wound up as a result of the transaction.
These are transactions where a preference is given to a creditor such that it places that creditor in a better position than he would have been if the company was liquidated. The unfair preference must have taken place within two years ending with the date of presentation of the winding up application, where the recipient of the preference is an associate; and within six months ending with the date of presentation of the winding up application in all other cases.
If prior to the winding up, the company’s business had been carried on with the intent of defrauding the company’s creditors or for any fraudulent purpose, the liquidator, creditor or contributory of the company may apply to Court to make the person responsible for or who was party to such activities personally liable for the debts of the company (section 340 of the Companies Act (Cap. 50)).
It also attracts penal consequences and persons thus involved are liable upon conviction to a fine not exceeding S$15,000 or to a term of imprisonment of up to seven years or both.
Retention of Title Clause
Definition in section 227H(9) of the Companies Act (Cap. 50):
In essence, the objective of retention of title clauses is to confer upon the seller of goods some degree of security against the insolvency of the company by reserving the property rights in the goods until the seller is fully paid.
Retention of Title must be drafted with precision in the contract for the sale of goods. The original goods and the products made must be identifiable and kept separate. The seller’s right to follow the goods into the manufacturing process and the sale proceeds must be expressly provided for, and a fiduciary (or trust) relationship of principal and agent or bailor and bailee is necessary.
A retention of title clause, insofar as it might extend to finished products made out of goods supplied or proceeds, has generally been held to be a registrable charge which is void for non-registration.
Right of Set Off
Section 88 of the Bankruptcy Act (Chapter 20) on Mutual Credit and Set Off applies to winding up. Where there are mutual credits, debts or dealings between the company and a creditor, these dealings may be set off against each other and the creditor or the company can only claim the balance sum due against the other. There can be no claim for set off if at the time of extending credit, the creditor had known that a winding up application was pending against the company. The rule as to set off operates automatically and is mandatory, in that parties cannot contract out of it.