COVID-19 TEMPORARY BILL

Temporary relief from some legal obligations under the COVID-19 (Temporary Measures) Bill

On 7 April 2020, Singapore has passed the COVID-19 (Temporary Measures) Bill to offer temporary reliefs to address the impact of COVID-19 pandemic to businesses and individuals who are unable to fulfil their contractual obligations as well as additional temporary measures relating to bankruptcy and solvency, which was dubbed as a “legal circuit breaker” by Singapore Law and Home Affairs Minister Mr. K Shanmugam.
 

Temporary relief in relation to contractual obligations

The temporary relief offered under the Bill covers contractual obligations that are to be performed on or after 1 February 2020, for contracts that were entered into or renewed before 25 March 2020. Under the temporary relief, a contracting party will be prohibited from taking certain legal actions which includes amongst others, court and insolvency proceedings, against a non-performing party covering the following types of contracts:

1. Leases or licenses for non-residential immovable property;
2. Construction contract or supply contract;
3. Contracts for the provision of goods and services for events;
4. Certain contracts for goods or services for visitors to Singapore, domestics tourists or outbound tourists, or promotion of tourism; and
5. Certain loan facilities granted by a bank or a finance company to SMEs.

The relevant temporary relief will be in place for a prescribed period, i.e. six months from the commencement of the Act at first instance and may be subsequently extended for up to a year. In addition, assessors will be appointed by the Minister for Law to resolve disputes arising from the application of the Act.
 

Temporary relief in relation to bankruptcy and insolvency

The Bill also introduces temporary relief relating to bankruptcy and insolvency as follows:

1. Increasing the minimum debt amount eligible for the Debt Repayment Scheme administered by the Official Assignee under the Bankruptcy Act from S$100,000 to S$250,000;

2. Increasing the monetary threshold for individual bankruptcy from S$15,000 to S$60,000; 

3. Increasing the monetary threshold for business insolvency from S$10,000 to S$100,000; and

4. Lengthening the statutory period to respond to demands from creditors from 21 days to 6 months.

The above measures will grant individuals and businesses in financial distress a longer grace period to meet their debt obligations before facing legal actions under the relevant statutory provisions. Additionally, the directors of a company will be temporarily relieved from their obligations to prevent their companies trading while insolvent so long as the debts are incurred in the company’s ordinary course of business which will be essential for company’s survival during this very difficult period. Notwithstanding that, the directors remain criminally liable if the debts are incurred fraudulently.