SPEECH AT THE 2ND READING OF THE INSOLVENCY, RESTRUCTURING AND DISSOLUTION (AMENDMENT) BILL & THE COVID-19 (TEMPORARY MEASURES)(AMENDMENT NO.3) BILL

Madam Deputy Speaker, I rise in support of this Bill which will establish a simplified insolvency programme (“Programme” for short). The intent of this Programme is to provide a simplified process for eligible companies that require support, to:

(a) restructure their debts to rehabilitate the business, or

(b) wind up the company as the business has ceased to be viable.

The Programme focuses on assisting small companies by providing simpler, faster and lower-cost proceedings for eligible companies e.g. (for simplified debt restructuring) requiring one court application (instead of two court applications in a typical scheme of arrangement).

In respect of a simplified winding up, the process is based on the voluntary winding up process (instead of a court ordered winding up) and removes the necessity of a court application to place the company into winding up.

Limited Impact on Workers

The simplified proceedings may help to reduce the time and costs involved in conventional insolvency processes, which in turn, may help to somewhat increase the overall pool of assets and monies to be eventually used to satisfy a company’s debts. For simplified debt restructuring, it may help certain businesses rehabilitate and survive this economic downturn, which in turn may help to preserve certain jobs.

However, as the primary intent of the Programme is to assist troubled companies, it therefore means that the Programme does not significantly improve the position of workers with owed salaries or retrenchment benefits.

This is something I have raised on several occasions in this House. In the event that a company has to wind up, even though there is a priority of debts provided in the Act, workers’ outstanding wages and salaries remain unsecured debts, which may result in a situation where there are little assets left to pay these workers’ salaries and benefits (including those provided in their collective agreements) after all the company’s secured debts have been satisfied.

In the event the company survives and continues its operations, an unpaid worker may still need to go through a protracted enforcement process against the company to recover unpaid salaries and retrenchment benefits where provided and applicable.

Even then, there is no guarantee that the worker would be able to recover all his outstanding salary, retrenchment benefits or benefits under their collective agreements. This is further exacerbated during recent times when companies undergo insolvency or other related proceedings such as judicial management and receivership. In any event, there is little or no recourse for both workers and unions as a moratorium of sorts prohibits the enforcement of rights under a collective agreement or any other due process.

Although a leave of court can be obtained, this has to be done through legal processes which may be too onerous, involve costs, and sometimes beyond the reach of workers and unions.

A good example would be the latest announcement of the closure of Robinsons Department Store last Friday. Robinsons is a branch of The Singapore Manual & Mercantile Workers’ Union (SMMWU) for which I am their Executive Secretary.

The union is in talks with the management and the liquidators. In fact, in this latest Robinsons saga which caught many unaware by the sudden closure, there are broadly three main groups that will be impacted.

First, for the 175 workers, a number long serving and loyal, their fate remains uncertain, as they are unsecured and as such rank low in the priority of debts if the liquidation goes ahead. It is disconcerting that workers who stay on to help the company out of loyalty may be left with little or nothing at all.

Second, the small and medium sized enterprises and vendors that are in business with Robinsons. Over the past few days, there have been several news reports quoting vendors who have come out to state that they have been unpaid for months. This is worrying, as it also signals a possible snowball effect, where a company is not duly paid and therefore has its business viability threatened, which ultimately, may lead to unintended impact and consequences on the livelihoods of workers employed in these SMEs.

Third, not to forget the many Robinsons customers who have bought and paid for items but have yet to receive those items, who now have to deal with the liquidators and left in the lurch.

Moving forward

It is laudable that the Bill seeks to help companies and businesses by simplifying and expediting relevant insolvency proceedings during these difficult economic times.

However, in the same vein, many workers have had their livelihoods impacted in this period of economic uncertainty. Hence, there should also be more direct assistance provided to support workers who seek to recover their unpaid wages/salaries by simplifying and expediting enforcement of recovery proceedings. This is especially pertinent where the employer/companies are experiencing financial difficulties and there are limited assets to satisfy all creditors. By the same token, vendors that have business with the company as well as consumers should also be accorded some form of protection in such scenarios.

Madam, suggestions notwithstanding, I stand in support of the Insolvency, Restructuring and Dissolution (Amendment) Bill.

Madam Deputy Speaker, I will now speak on the COVID-19 (Temporary Measures) Amendment No.3 Bill which I am also in support of. We are in challenging times, and the introduction of this No.3 Bill and its attendant initiatives are laudable.

This new Bill provides for contracts already entered into, to be renegotiated. This is something novel amidst these unprecedented and uncertain times. Renegotiation would aid businesses to survive the brunt of this downturn, as many of them had entered into contracts when the outlook was very different. The pricing model and assumptions as to costs were also quite different. Forcing them to continue with those terms or face liquidated damages would cause severe hardship to many SMEs and Micro-SMEs, especially those who just started business before COVID-19. The survivability of companies and businesses also has ramifications to jobs and workers. As such, this ability to re-negotiate will go some way to help many of these SMEs and Micro-SMEs stay in business and re-balance themselves.

In this regard, can Ministry of Law consider outlining certain set parameters for renegotiation which can help as many of these businesses as possible?

Notwithstanding, although this re-negotiation sounds plausible, I submit that we need to tread carefully and with caution and limit the scope of what we can and are able to do. This is to ensure that the fundamental principle of contractual sanctity is upheld and not undermined.

Finally, I would like to raise an issue on the decisions of assessors which is provided in the Act. I have residents as well as fellow practitioners who have feedbacked to me and raised questions and eyebrows over some of the decisions made by the assessors where a claim or dispute is brought before them under this Act.

I am aware the decision of the assessors is final but is there any other recourse which can be taken in the event where a decision is manifestly prejudicial against a non-offending or innocent party?

Madam, clarifications, and suggestions notwithstanding, I stand in support of the COVID-19 (Temporary Measures) Amendment No.3 Bill. Thank you.