Can’t Afford a Liquidator? The Simplified Winding Up Programme May Be Your Answer

A Story That Didn’t Have to End This Way

Mr L ran a small labour supply company. For years, his business was steady – supplying workers to a main contractor in the construction sector. Then COVID hit. Projects stalled. The main contractor, itself under severe financial stress, stopped paying Mr L’s invoices.

The bills kept coming. IRAS wanted their taxes. Workers needed their wages. Mr L did what he thought was the honourable thing – he negotiated with his workers, sold his HDB 5-room flat, and paid them from his own pocket. But it wasn’t enough. He borrowed money to settle the outstanding taxes owed by his company to IRAS.

Then, unable to afford a private liquidator – which can cost $15,000 to $50,000 or more – he struck off the company through ACRA and walked away.

Heart broken. Defeated. He took a construction job to survive.

The man who once supplied workers to construction sites was now a worker on one himself – not by choice, but because he didn’t know there was another way.

He didn’t have to lose his home. He didn’t have to borrow. He didn’t have to pay his company’s debts from his own pocket.

This article is for every director who finds themselves where Mr L was – so that you can make a different, informed choice.

You’re Not Alone

Since COVID-19 struck in 2020, thousands of small businesses in Singapore have struggled to recover. Supply chains broke. Customers disappeared. Costs rose. Many companies that survived the initial shock found themselves slowly bleeding out over the years that followed.

And it’s not just post-COVID businesses. Many new companies fail within their first few years. Directors – often first-timers – don’t know what options are available when things go wrong.

If your company can no longer pay its debts as they fall due, you are not a failure. You are facing a situation that requires a decision. And the sooner you make an informed one, the better the outcome – for you, your creditors, and your employees.

Warning Signs Your Company May Be Insolvent

Ask yourself:

• ❌ Can your company pay its debts when they fall due?
• ❌ Are creditors sending demand letters or statutory demands?
• ❌ Is IRAS issuing notices for unpaid taxes?
• ❌ Are you using personal funds to keep the company alive?
• ❌ Are you avoiding calls from suppliers or landlords?

If you answered “yes” to any of these, your company may be insolvent. That’s not the end – but it is the point where you need to understand your options.

What Are Your Options?

When a small company is insolvent, directors typically consider three paths:

For most small companies, the Simplified Winding Up Programme (SWUP) is the right answer.

What Is the Simplified Winding Up Programme (SWUP)?

The SWUP is part of the Simplified Insolvency Programme 2.0 (SIP 2.0), which took effect on 29 January 2026 as a permanent feature of Singapore’s insolvency framework under the Insolvency, Restructuring and Dissolution Act 2018.

It is designed for insolvent companies – as well as eligible dormant companies – that need a simpler, faster, and more affordable process to wind up in an orderly manner.

Key features:

• Entirely out of court – no need for expensive court applications
• Fewer formalities – simplified reporting, meeting, and publication requirements
• Notices published only on the Official Receiver’s website – no newspaper advertisements, reducing costs
• Administered by licensed Insolvency Practitioners (IPs) – experienced professionals in the private sector.
• Conversion available – can convert to winding up by Court or creditors’ voluntary winding up if circumstances change.
• Target completion: approximately one year where practicable

Do You Qualify? The Eligibility Criteria

Under SIP 2.0, the eligibility requirements have been dramatically simplified compared to the previous programme.

You only need to meet:

✅ Your company’s total liabilities (including contingent and prospective liabilities) must not exceed S$2 million

✅ There must be no circumstance which makes the company unsuitable for entry into the programme

That’s it.

The previous SIP 1.0 (2021 to 2025) had additional restrictions – annual revenue ($10 million), employee count (30), number of creditors (50), and realisable assets ($50,000). All of these have been removed under SIP 2.0, making the programme accessible to more companies.

 Circumstances that may make a company unsuitable include:

• Already involved in other insolvency proceedings
• Suspected misconduct or preferential transactions requiring complex investigation

Funding requirement:

• Your company must have sufficient funds to engage a licensed Insolvency Practitioner, OR funding can be provided by directors or third parties

 How Does It Work?

The SWUP process has five key stages:

1. Passing of Special Resolution – The company resolves to enter the programme and nominates a liquidator
2. Assessment of Entry Eligibility – The liquidator determines if the company qualifies (liabilities ≤ $2M, no unsuitable circumstances). Creditors have 21 days to object.
3. Assessment of Early Dissolution Suitability – If the company has minimal assets and no investigation is needed, it may qualify for a faster closure
4. Realisation of Assets & Adjudication of Claims – If early dissolution is not suitable, the liquidator collects assets, assesses creditor claims, and declares dividends
5. Discharge from Programme – Final account prepared, company dissolved and removed from the register

For the full process flowcharts, refer to MinLaw’s official SIP 2.0 Webinar Slides: 👉 https://io.mlaw.gov.sg/files/SIP%202_0/SIP_2_0_Webinar_Slides.pdf 

What This Means for You (In Plain English)

What Does It Cost?

Let’s be transparent about costs.

Government fees are minimal:

Excludes all other professional fees and disbursements, where applicable (e.g., liquidator and legal professional fees and/or financial accounting service fees).

The main cost is the licensed Insolvency Practitioner’s (liquidator’s) professional fees, which are negotiated privately between the company and the IP, and approved at the general meeting. These are not prescribed by the Government.

However, the simplified process – fewer meetings, no court applications, no newspaper advertisements – means costs should be significantly lower than conventional liquidation (Estimated range $15,000 -$50,000+).

Important: Even if your company has no funds, directors or third parties can provide funding to engage the IP. This is still far cheaper than paying company debts from your personal assets – as Mr L tragically discovered.

For more information, visit the Insolvency Office: 👉 https://io.mlaw.gov.sg

“But What About IRAS? Won’t They Come After Me?”

This is the most common fear we hear. Let’s address it directly.

IRAS is a creditor of your company – not a creditor of you personally.

In a winding up, IRAS files a proof of debt like any other creditor. They receive whatever distribution is available from the company’s assets, in the order of priority prescribed by law.

Can IRAS object to your SWUP application?

Creditors (including IRAS) have 21 days to object to a company’s entry into SWUP. However, they can only object on the basis that the eligibility requirements are not met (i.e., liabilities exceed $2 million or there are unsuitable circumstances). They cannot block a legitimate winding up simply because they are owed money – that is the very nature of insolvency.

If an objection is raised, the liquidator assesses whether the entry requirements are satisfied. If they are, the programme proceeds.

Can IRAS pursue you personally?

Generally, no – unless:

• You gave a personal guarantee to IRAS (rare)
• IRAS issued a Section 45 notice under the Income Tax Act (making you personally liable for tax you were responsible for collecting/paying)
• There was fraud or wilful tax evasion

For Mr L, the IRAS debt was a company debt. He was not legally required to borrow money to pay it. In a SWUP, IRAS would simply have participated as a creditor and received whatever distribution was available from the company’s assets.

A Note on Personal Guarantees

If you have given personal guarantees – for bank loans, rental deposits, hire purchase agreements, or other obligations – those guarantees survive the winding up of your company. They are your personal obligations regardless of what happens to the company.

This is an important distinction:

• Company debts → dealt with in the winding up. If insufficient assets, creditors bear the loss.
• Personal guarantees → remain your responsibility even after the company is dissolved.

Speak with a lawyer or your auditor or liquidator to understand your full exposure before making any decisions.

 Director Concerns – Frequently Asked Questions

Q: What happens to my powers as director? Upon commencement of the SWUP, your management powers cease. The liquidator takes control of the company’s affairs.

Q: Can I start a new business after SWUP? Generally, yes. The act of winding up your company through SWUP does not, by itself, prohibit you from starting a new company. Other provisions under the Companies Act may apply (e.g., if you have been disqualified by a court order), but SWUP itself does not impose such a restriction.

Q: Am I personally liable for company debts? No – unless you gave personal guarantees, traded fraudulently or wrongfully, or received specific statutory notices (e.g., Section 45 from IRAS). A company is a separate legal entity. Its debts are not yours.

Q: What if there’s suspected misconduct? Cases involving suspected misconduct are generally unsuitable for SWUP. If the liquidator identifies potential claims during the process, they will publish a notice to creditors seeking funding for investigations. If no creditor provides funding within 14 days, the liquidator takes no further action and proceeds with the winding up

Q: Do I still need to file annual returns with ACRA? No. Once the SWUP commences, these responsibilities shift to the liquidator.

What Could Mr L Have Done Differently?

The difference is knowledge. Mr L didn’t know his rights. He didn’t know the Simplified Winding Up Programme existed. He didn’t know that a company’s debts are not the director’s debts.

What Should You Prepare?

If you think SWUP may be right for your company, gather the following:

• Statement of Affairs – a snapshot of your company’s assets and liabilities
• Unaudited management accounts (these are acceptable – you don’t need audited financials)
• List of creditors – who you owe, and how much
• List of assets – what the company owns
• Details of any personal guarantees you have given
• Any correspondence from IRAS or other creditors

You can find the Register of Insolvency Practitioners at: go.gov.sg/register-of-insolvency-practitioners.

Act Early. Act Informed.

The worst thing you can do is nothing. The second worst thing is to sacrifice your personal assets for company debts you may not be legally obligated to pay. If your company is insolvent or no longer viable:

1. Understand that you are not your company. Limited liability exists to protect you.
2. Don’t strike off a company with outstanding debts. It’s not a proper closure – it’s a ticking time bomb.
3. Don’t sell your home or borrow money to pay company debts unless you are legally required to (e.g., personal guarantees).
4. Seek professional advice early. The earlier you act, the more options you have.

Contact Us

SC Mohan PAC

Whether you need audit services with direct partner involvement, compilation and review services for audit-exempt companies, corporate secretarial support, or advisory services on director duties and regulatory changes — we are here to help.

If you’re facing financial difficulties with your company and need guidance on your options — reach out to us. We’ll help you make an informed decision.

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Disclaimer

The information in this article is current as of 3 July 2026 and is intended for general informational purposes only. It does not constitute legal, financial, or professional advice. Every company’s situation is unique – please seek professional guidance for your specific circumstances. The eligibility criteria, processes, and fees described may change. Please verify current requirements with the Insolvency Office or a licensed Insolvency Practitioner.