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About Liquidation or Winding Up


About Liquidation or Winding Up | Bestar
About Liquidation or Winding Up | Bestar


Liquidation or winding up is the process of dissolving a company and distributing its assets to its creditors and shareholders. There are two main types of liquidation in Singapore:

  • Members' voluntary liquidation (MVL): This is a type of liquidation that is initiated by the company's members or shareholders. It is usually used when the company is solvent and is able to pay its debts in full within 12 months of the commencement of the liquidation.

  • Creditors' voluntary liquidation (CVL): This is a type of liquidation that is initiated by the company's creditors. It is usually used when the company is insolvent and is unable to pay its debts in full.

In both types of liquidation, a liquidator is appointed to oversee the process. The liquidator's duties include:

  • Collecting the company's assets

  • Selling the company's assets

  • Distributing the proceeds of the sale to the company's creditors and shareholders

  • Dissolving the company

The liquidation process can be complex and time-consuming. It is important to seek advice if your company is considering liquidation.

Here are some of the reasons why a company might be wound up in Singapore:

  • The company is insolvent and unable to pay its debts.

  • The company's members or shareholders have passed a resolution to wind up the company.

  • A creditor has applied to the court for an order to wind up the company.

  • The company has been convicted of a criminal offence and the court has ordered its winding up.

If your company is wound up, you will need to take steps to protect your interests. This may include:

  • Filing a proof of debt with the liquidator.

  • Attending meetings of creditors and shareholders.

  • Challenging the liquidator's decisions.

What is Liquidation or Winding-up


Liquidation or winding-up is the process of dissolving a company and distributing its assets to its creditors and shareholders. In Singapore, there are two main types of liquidation:

  • Members' voluntary liquidation (MVL): This is a type of liquidation that is initiated by the company's members or shareholders. It is usually used when the company is solvent and is able to pay its debts in full within 12 months of the commencement of the liquidation.

  • Creditors' voluntary liquidation (CVL): This is a type of liquidation that is initiated by the company's creditors. It is usually used when the company is insolvent and is unable to pay its debts in full.

In both types of liquidation, a liquidator is appointed to oversee the process. The liquidator's duties include:

  • Collecting the company's assets

  • Selling the company's assets

  • Distributing the proceeds of the sale to the company's creditors and shareholders

  • Dissolving the company

The liquidation process can be complex and time-consuming. It is important to seek advice if your company is considering liquidation.


Here are some of the reasons why a company might be wound up in Singapore:

  • The company is insolvent and unable to pay its debts.

  • The company's members or shareholders have passed a resolution to wind up the company.

  • A creditor has applied to the court for an order to wind up the company.

  • The company has been convicted of a criminal offence and the court has ordered its winding up.

If your company is wound up, you will need to take steps to protect your interests. This may include:

  • Filing a proof of debt with the liquidator.

  • Attending meetings of creditors and shareholders.

  • Challenging the liquidator's decisions.

If you have any questions about liquidation or winding up in Singapore, you should consult with an accountant.


Here are some of the key differences between MVL and CVL:

  • In an MVL, the company's members or shareholders are responsible for appointing the liquidator. In a CVL, the creditors are responsible for appointing the liquidator.

  • In an MVL, the company's assets are distributed to the members or shareholders in accordance with their shares. In a CVL, the company's assets are distributed to the creditors in accordance with the order of priority set out in the Insolvency, Restructuring and Dissolution Act (IRDA).

Just Distribution of Assets


The distribution of assets in a liquidation in Singapore is governed by the Insolvency, Restructuring and Dissolution Act (IRDA). The order of priority for payment during the distribution phase of the liquidation is as follows:

  1. Preferential creditors: These are creditors who have a statutory right to be paid first, even before unsecured creditors. Examples of preferential creditors include employees who are owed wages or salaries, and the Inland Revenue Authority of Singapore (IRAS) for taxes.

  2. Costs of the liquidation: This includes the liquidator's fees, as well as the costs of advertising the liquidation and notifying creditors.

  3. Unsecured creditors: These are creditors who do not have any security over the company's assets. They are paid out of the remaining assets on a pari passu basis, which means that they are paid equally.

  4. Secured creditors: These are creditors who have a security interest in the company's assets, such as a mortgage or a charge. They are paid out of the proceeds of the sale of the secured assets, up to the amount of their security.

  5. Contributories: These are the company's shareholders. If there are any assets remaining after all other creditors have been paid, they are distributed to the shareholders in accordance with their shareholdings.

It is important to note that the order of priority for payment of assets in a liquidation is not always clear-cut. In some cases, there may be disputes between creditors over which creditors should be paid first. These disputes will be resolved by the liquidator or by the court.


Reasons for Winding Up a Company

There are many reasons why a company might be wound up in Singapore. Here are some of the most common reasons:

  • Insolvency: This is the most common reason for winding up a company. If a company is insolvent, it means that it is unable to pay its debts. In this case, the company's creditors may apply to the court to have the company wound up.

  • Members' or shareholders' resolution: The company's members or shareholders may pass a resolution to wind up the company. This is usually done if the company is no longer profitable or if there are other reasons why the members or shareholders no longer want the company to continue.

  • Order of the court: The court may order a company to be wound up if it is in the public interest to do so. This may happen if the company is being used for illegal purposes or if it is causing harm to the environment.

  • Just and equitable: The court may also order a company to be wound up if it is just and equitable to do so. This may happen if there is a deadlock among the company's members or shareholders, or if the company is being run in a way that is unfair to its creditors or shareholders.

Here are some other reasons why a company might be wound up in Singapore:

  • The company has ceased business activities.

  • There is a management deadlock.

  • There is shareholder oppression.

  • The company is being restructured.

  • The company has breached statutory provisions.

  • The company is acting outside its scope of activities.

If a company is wound up, its assets will be distributed to its creditors and shareholders in accordance with the order of priority set out in the Insolvency, Restructuring and Dissolution Act (IRDA).


What are the Various Types of Winding Up


There are two main types of winding up in Singapore:

  • Voluntary winding up: This is when the company itself, its members or shareholders, or its creditors initiate the winding up process.

  • Compulsory winding up: This is when the court orders the winding up of the company.

Voluntary winding up can be further classified into two types:

  • Members' voluntary winding up (MVL): This is when the company's members or shareholders initiate the winding up process. It is usually used when the company is solvent and is able to pay its debts in full within 12 months of the commencement of the winding up.

  • Creditors' voluntary winding up (CVL): This is when the company's creditors initiate the winding up process. It is usually used when the company is insolvent and is unable to pay its debts in full.

Compulsory winding up can be ordered by the court on a number of grounds, including:

  • The company is unable to pay its debts.

  • The company is carrying on business with intent to defraud creditors.

  • The company is being dissolved by the court.

  • The company is being wound up by the members or shareholders, but the winding up is being conducted in a manner that is unfair to the creditors.

The type of winding up that is used will depend on the circumstances of the case. For example, if the company is solvent, then a MVL may be the most appropriate option. However, if the company is insolvent, then a CVL may be the most appropriate option.


The winding up process is overseen by a liquidator, who is appointed by the court or by the company's members or shareholders. The liquidator's duties include:

  • Collecting the company's assets.

  • Selling the company's assets.

  • Distributing the proceeds of the sale to the company's creditors and shareholders.

  • Dissolving the company.

The winding up process can be complex and time-consuming. It is important to seek advice if your company is considering winding up.


What are the Stages Involved in Compulsory Liquidation


Here are the stages involved in compulsory liquidation in Singapore:

  1. Application for winding up order: A creditor or the company itself may apply to the court for a winding up order. The application must be made in writing and must set out the grounds on which the winding up is being sought.

  2. Hearing of the application: The court will hold a hearing to consider the application for a winding up order. The company will have the opportunity to oppose the application.

  3. Making of the winding up order: If the court is satisfied that the grounds for winding up have been met, it will make a winding up order. The winding up order will take effect immediately.

  4. Appointment of liquidator: The court will appoint a liquidator to oversee the winding up process. The liquidator will have the power to collect the company's assets, sell the company's assets, and distribute the proceeds of the sale to the company's creditors and shareholders.

  5. Distribution of assets: The liquidator will distribute the proceeds of the sale of the company's assets to the company's creditors and shareholders in accordance with the order of priority set out in the Insolvency, Restructuring and Dissolution Act (IRDA).

  6. Dissolution of the company: Once the liquidator has distributed all of the company's assets, the company will be dissolved. The company will cease to exist as a legal entity.

Here are some of the key stages involved in compulsory liquidation:

  • Application for winding up order: This is the first step in the compulsory liquidation process. The application must be made by a creditor or the company itself.

  • Hearing of the application: The court will hold a hearing to consider the application for a winding up order. The company will have the opportunity to oppose the application.

  • Making of the winding up order: If the court is satisfied that the grounds for winding up have been met, it will make a winding up order. The winding up order will take effect immediately.

  • Appointment of liquidator: The court will appoint a liquidator to oversee the winding up process. The liquidator will have the power to collect the company's assets, sell the company's assets, and distribute the proceeds of the sale to the company's creditors and shareholders.

  • Distribution of assets: The liquidator will distribute the proceeds of the sale of the company's assets to the company's creditors and shareholders in accordance with the order of priority set out in the IRDA.

  • Dissolution of the company: Once the liquidator has distributed all of the company's assets, the company will be dissolved. The company will cease to exist as a legal entity.

What Effects does Liquidation have on the Company and Creditors


Liquidation has a significant impact on both the company and its creditors. Here are some of the effects of liquidation on the company and creditors in Singapore:


Effects on the company:

  • The company will be dissolved and cease to exist as a legal entity.

  • The company's assets will be sold to pay off its debts.

  • Any remaining assets will be distributed to the company's shareholders.

  • The company will no longer be able to trade or conduct business.

  • The company's directors and officers may be held liable for any debts that are not paid.

Effects on creditors:

  • Creditors may not be able to recover all of their debts.

  • Creditors will have to file a proof of debt with the liquidator in order to be considered for a distribution.

  • The order of priority for payment of creditors is set out in the Insolvency, Restructuring and Dissolution Act (IRDA).

  • Creditors may be able to pursue personal guarantees from the company's directors or shareholders.

Here are some additional effects of liquidation on the company and creditors:

  • The company's credit rating will be severely damaged.

  • The company's employees may lose their jobs.

  • The company's customers may be left without a supplier.

  • The company's suppliers may not be paid for their goods or services.

Liquidation is a complex and time-consuming process. It is important to seek advice if your company is considering liquidation.


What is the Role of a Liquidator in a Compulsory Liquidation


The role of a liquidator in a compulsory liquidation in Singapore is to oversee the winding up process and to distribute the company's assets to its creditors and shareholders. The liquidator has a wide range of powers, including:

  • Collecting the company's assets: The liquidator has the power to collect the company's assets, including its cash, property, and debts.

  • Selling the company's assets: The liquidator has the power to sell the company's assets in order to raise funds to pay off the company's debts.

  • Adjudicating claims: The liquidator has the power to adjudicate claims made by the company's creditors.

  • Distributing the proceeds of the sale: The liquidator has the power to distribute the proceeds of the sale of the company's assets to the company's creditors and shareholders in accordance with the order of priority set out in the Insolvency, Restructuring and Dissolution Act (IRDA).

  • Dissolving the company: Once the liquidator has distributed all of the company's assets, the liquidator has the power to dissolve the company.

The liquidator is appointed by the court and is usually a licensed insolvency practitioner. The liquidator is responsible for acting in the best interests of the company's creditors and shareholders.


Here are some of the key responsibilities of a liquidator in a compulsory liquidation:

  • To investigate the company's affairs and assets.

  • To determine the company's liabilities.

  • To sell the company's assets.

  • To distribute the proceeds of the sale to the company's creditors and shareholders.

  • To dissolve the company.

The liquidator is also responsible for keeping the court informed of the progress of the liquidation. The liquidator must file regular reports with the court, and the court may hold hearings to review the liquidator's progress.


The liquidator is a powerful figure in the liquidation process, and they have a significant impact on the outcome of the liquidation. It is important to choose a liquidator who is experienced and knowledgeable in the field of insolvency.


What are the Charges of the Official Receiver


The Official Receiver (OR) is a public officer who is appointed by the High Court to act as the liquidator of companies or limited liability partnerships (“LLPs”) undergoing compulsory winding up in Singapore. The OR's role as a liquidator is to expeditiously recover and realise the assets of the wound up company or LLP for the distribution of dividends to creditors and administer any outstanding matters involving the wound up company or LLP.


The OR's charges are set out in the Fees (Winding Up and Dissolution of Companies and other Bodies) (Amendment) Order 2017. The charges are as follows:

  • Winding up deposit: A winding up deposit of $1,000 is payable by the applicant for a winding up order.

  • Liquidator's fees: The OR's liquidator's fees are calculated on a sliding scale, depending on the value of the company's assets. The fees range from 0.5% to 2% of the value of the company's assets.

  • Other charges: The OR may also charge for other services, such as advertising the winding up, notifying creditors, and holding meetings.

The OR's charges are subject to review by the High Court.


Here are some additional information about the Official Receiver's charges:

  • The winding up deposit is refundable if the winding up order is not made.

  • The liquidator's fees are payable by the company's creditors.

  • The other charges are payable by the company.

  • The OR's charges are subject to review by the High Court.

If you are considering applying for a winding up order, you should contact the OR to get an estimate of the charges.


Why Engage Bestar in Liquidation or Winding Up


Sure, here are some of the reasons why you should engage Bestar in Liquidation or Winding Up:

  • Experience: Bestar has over 20 years of experience in the insolvency and restructuring industry. They have a deep understanding of the laws and regulations governing liquidation and winding up in Singapore.

  • Expertise: Bestar's team of professionals are highly experienced and qualified insolvency practitioners. They have a proven track record of successfully managing liquidation and winding up cases.

  • Competence: Bestar is committed to providing high-quality services to their clients. They are always up-to-date on the latest developments in the insolvency and restructuring industry.

  • Cost-effectiveness: Bestar offers competitive fees for their services. They are committed to providing value for money to their clients.

  • Personalized service: Bestar takes the time to understand their clients' needs and objectives. They tailor their services to meet the specific requirements of each client.

Here are some of the benefits of engaging Bestar in Liquidation or Winding Up:

  • Peace of mind: You can be confident that your liquidation or winding up case will be handled by experienced and qualified professionals.

  • Cost-effectiveness: You will be able to save money by engaging Bestar's services.

  • Speed: Bestar will work quickly and efficiently to ensure that your liquidation or winding up case is completed as soon as possible.

  • Flexibility: Bestar is flexible and can adapt their services to meet your specific needs.

  • Confidentiality: Bestar will keep your information confidential.


Connect with Us


If you are considering liquidation or winding up your company in Singapore, contact Bestar for a consultation. We will be able to assess your situation and provide you with the best possible advice.


Let me know if you have any other questions.



poet mlaw.gov.sg corporate insolvency about liquidation or winding up

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