What Is the Simplified Insolvency Programme?

On 29 January 2026, the Ministry of Law launched the revamped Simplified Insolvency Programme, known as SIP 2.0. This programme provides micro and small companies in financial difficulty with streamlined, lower-cost routes to either restructure their debts or wind up in an orderly manner. It is now a permanent feature of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA).

The original SIP was introduced in 2020 as a temporary COVID-19 relief measure. It recognised that traditional insolvency proceedings — court-supervised schemes of arrangement and formal liquidation — were often too costly and complex for smaller companies. Many micro and small businesses simply could not afford the legal and professional fees associated with conventional insolvency processes, leaving them without practical options when they fell into financial distress.

SIP 2.0 takes the lessons learned from the original programme and makes significant improvements. It is now administered by licensed insolvency practitioners (IPs) in the private sector rather than the Official Receiver, features simpler eligibility criteria, and offers further cost reductions through streamlined administrative requirements.

Who Is Eligible for SIP 2.0?

One of the most significant changes under SIP 2.0 is the simplification of eligibility criteria. Under the original SIP, companies had to meet multiple conditions relating to annual sales revenue, number of employees, number of creditors, and total liabilities. These overlapping requirements made it difficult for some genuinely distressed small companies to qualify.

Under SIP 2.0, there is now only one general eligibility criterion: the company’s total liabilities must not exceed S$2 million. The previous caps on annual revenue, employee headcount, and number of creditors have all been removed.

This single-criterion approach is a welcome change. It broadens access to the programme and reduces the administrative burden of proving eligibility across multiple metrics. A company that owes S$1.8 million to a large number of creditors but has higher revenue, for example, would not have qualified under the old rules but can now access SIP 2.0.

It is worth noting that eligibility is assessed at the point of application. Companies should ensure their financial records are up to date and that they can demonstrate their total liabilities fall within the S$2 million threshold.

The Two Programmes Under SIP 2.0

SIP 2.0 encompasses two distinct programmes, each designed for different circumstances. Choosing the right one depends on whether the business is potentially viable or whether it needs to be wound up.

Simplified Debt Restructuring Programme (SDRP)

The SDRP is designed for companies that are in financial difficulty but may still be viable if their debts can be restructured. Under Part 5A of the IRDA, the SDRP provides a framework for the company to negotiate a compromise or arrangement with its creditors, with the assistance of a licensed insolvency practitioner.

Key features of the SDRP include:

Moratorium protection. Upon acceptance into the SDRP, the company benefits from a statutory moratorium under Section 72K(1) of the IRDA. This moratorium lasts for 30 days and prevents creditors from commencing or continuing legal proceedings against the company. This breathing space is critical — it allows the company and the IP to develop a debt restructuring proposal without the pressure of ongoing legal action. The moratorium can be extended once for a further 30 days if creditors holding at least two-thirds in value of the company’s debts support the extension.

Creditor approval. Under Section 72M of the IRDA, the debt restructuring proposal must be approved at a creditors’ meeting. If the requisite majority of creditors votes in favour, the proposal becomes binding on all creditors. This out-of-court mechanism is significantly cheaper and faster than a traditional court-supervised scheme of arrangement under Section 210 of the Companies Act.

IP administration. A licensed insolvency practitioner manages the entire process, from assessing the company’s financial position to formulating the restructuring proposal and facilitating the creditors’ meeting.

The SDRP is best suited for companies that have a fundamentally sound business model but are struggling with cash flow or debt repayment. For instance, a company that experienced a temporary downturn and accumulated debts but has strong order books and customer relationships may benefit from restructuring rather than winding up.

Simplified Winding Up Programme (SWUP)

The SWUP, governed by Part 10A of the IRDA, is designed for companies that are no longer viable and need to be wound up, as well as for eligible dormant companies. It provides an orderly, cost-effective alternative to formal court-ordered liquidation.

Key features of the SWUP include:

Out-of-court process. Like the SDRP, the winding up process under the SWUP takes place entirely out of court. This removes the need for costly court applications and significantly reduces professional fees.

Reduced publication requirements. Under SIP 2.0, required notices need only be published on MinLaw’s website, rather than in the English local daily newspaper and the Government’s e-Gazette. This change alone reduces costs meaningfully. Lodgments are still made on ACRA’s BizFile portal to maintain the permanent public record.

IP-led process. A licensed insolvency practitioner is appointed to manage the winding up, including realising the company’s assets, paying creditors according to the statutory priority, and distributing any remaining proceeds.

The SWUP is appropriate for companies that have ceased operations or have no realistic prospect of returning to profitability. It offers a more dignified and orderly exit than simply allowing the company to be struck off by ACRA for non-compliance, which can leave directors with ongoing liabilities and unresolved creditor claims.

SIP 2.0 vs. Striking Off vs. Traditional Winding Up

Business owners facing the decision to close a company in Singapore have several options, and it is important to understand how they compare.

Striking off under Section 344 of the Companies Act is the simplest route. It involves applying to ACRA to have the company’s name removed from the register. However, striking off is only suitable for companies that have ceased trading, have no outstanding liabilities, and have no assets to distribute. ACRA will not approve a striking off application if the company has outstanding debts or ongoing legal proceedings. The process typically takes about four months.

Traditional winding up (liquidation) is a formal, court-supervised process under Part 8 or Part 9 of the IRDA. It is comprehensive but expensive — professional fees for a private liquidator can run into tens of thousands of dollars, and the process can take years to complete. This route is necessary for larger companies with complex affairs but is often disproportionate for micro and small businesses.

SIP 2.0 fills the gap between these two options. It is designed for companies that have liabilities (making them ineligible for striking off) but are too small to justify the cost of traditional winding up. The SWUP provides an orderly process for settling debts and winding down affairs at a fraction of the cost.

For companies that may be viable with some debt relief, the SDRP offers something that neither striking off nor traditional winding up can provide — a genuine chance at rehabilitation.

How the Process Works: A Step-by-Step Overview

While the specific steps may vary depending on whether a company enters the SDRP or the SWUP, the general process under SIP 2.0 follows this broad framework:

Step 1: Engage a licensed insolvency practitioner. The company must first engage a licensed IP to assess its financial situation and determine whether the SDRP or SWUP is more appropriate. The IP will review the company’s books, liabilities, assets, and business prospects.

Step 2: Application. The IP submits the application on behalf of the company. The application must demonstrate that the company meets the eligibility criterion of total liabilities not exceeding S$2 million.

Step 3: Acceptance and moratorium (SDRP only). If the company is accepted into the SDRP, the statutory moratorium takes effect, providing 30 days of protection from creditor action.

Step 4: Proposal development and creditor engagement. For the SDRP, the IP works with the company to develop a debt restructuring proposal and then convenes a creditors’ meeting for approval. For the SWUP, the IP proceeds with realising assets and settling debts according to statutory priority.

Step 5: Completion. Under the SDRP, if the restructuring proposal is approved, the company continues operating under the agreed terms. Under the SWUP, once all assets have been distributed and debts settled as far as possible, the company is dissolved.

Key Considerations for Company Directors

Directors of companies in financial difficulty should be aware of several important points when considering SIP 2.0.

Early action is critical. The sooner a company seeks help, the more options it is likely to have. A company that acts early may qualify for the SDRP and save the business, whereas delaying until debts spiral beyond S$2 million would disqualify the company from SIP 2.0 entirely.

Director duties continue. Directors remain bound by their fiduciary duties under Sections 156 and 157 of the Companies Act even when the company is in financial distress. In particular, directors must not allow the company to trade while insolvent (i.e., when the company is unable to pay its debts as they fall due). Entering the SDRP or SWUP demonstrates responsible action.

Tax implications should be considered. Debts that are forgiven under a restructuring arrangement may have tax implications. IRAS has previously issued guidance on the tax treatment of debts forgiven under MinLaw’s Simplified Debt Restructuring Programme. Companies should consult their tax advisors.

Outstanding statutory filings must be addressed. Companies with outstanding ACRA filings or IRAS returns should work to regularise their compliance status before or during the SIP 2.0 process. Outstanding compliance issues can complicate insolvency proceedings.

How Singapore Secretary Services Can Help

Navigating company closure or debt restructuring can be daunting, particularly when statutory compliance obligations continue to apply throughout the process. At Singapore Secretary Services, we assist companies in maintaining their corporate compliance during financially challenging periods, including ensuring that statutory filings, annual returns, and other ACRA requirements remain up to date.

If your company is facing financial difficulty and you are considering your options — whether that is the Simplified Insolvency Programme, striking off, or continuing to trade — our team can help you understand your compliance obligations and connect you with the right professionals, including licensed insolvency practitioners, to guide you through the process.

Contact us today for a consultation on your company’s situation. Early professional advice can make a significant difference in the options available to you.