BANKRUPTCY (AMENDMENT) BILL

Order for Second Reading read.

The Attorney-General (Mr C. H. Butterfield): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, I should like, as a preliminary, to express my regret that printed copies of the Bill were not in the hands of Mem- bers until yesterday. I fully appreciate, Sir, that it is ordinarily very desirable that Members should have a longer time in which to study the implications of legislation which is introduced into this Assembly for their consideration; but I hope, Sir, that the explanatory note which is appended to the printed copy of the Bill will have been sufficient to inform Members of the purpose and the effect of the amendments which are now proposed. I venture to hope, Sir that the nature of those amendments will enable the Assembly to give a welcome to this measure, a welcome which we on this side of the House consider that it deserves.

Now, Sir, as is perfectly clear from the title of the Bill, its purpose is to amend the law relating to bankruptcy. It is, Sir, a branch of the law of which relatively few of us have any specialised knowledge and with which most of us are, I think, unfamiliar. For this reason, Sir, it will not, I hope, be out of place if, in moving the Second Reading of the Bill, I were to preface my remarks with a few rather general observations.

Now, Sir, it can be stated, with reference to the existing bankruptcy laws of Singapore - and I am speaking very generally - that their purpose is to preserve and maintain a fair and even balance between the debtor who cannot pay his debts and his creditors, and also to maintain such a balance between the creditors as amongst themselves. Now, Sir, to achieve that purpose, a debtor's property and his financial affairs are taken from his control and put into the hands of a manager and trustee. Here in Singapore that manager and trustee is the Official Assignee, and it is, of course, to the Official Assignee that a bankrupt's creditors must look for payment of their claims.

Now, Sir, this Bill is particularly concerned with two provisions of the Bankruptcy Ordinance; the first of those provisions being that which enables a creditor to make his debtor a bankrupt where the debt amounts to $100 or more. And the second of the two provisions with which the Bill is particularly concerned, Sir, is that which gives priority to the claims of a bankrupt's employees in respect of unpaid wages up to a maximum of $250, where those wages have been earned within four months of the date of the receiving order; that is, the order which makes the Official Assignee the receiver of the property of the bankrupt.

Now, Sir, the fall in the value of money which has taken place in recent years, particularly since the last war, has clearly, in the view of the Government, made the two provisions to which I have just referred obsolete. Accordingly, what is now proposed by this amending Bill is, firstly, that the sum of $100 to which I have referred should be increased to $500. That is effected by clause 2 of the Bill. Putting it in another way, if that amendment becomes part of the law, the position in future will be that a debtor must owe a minimum of $500 before he can be made a bankrupt, instead of $100 as at present. Now, Sir, this proposal necessitates a number of consequential amendments to the Bankruptcy Ordinance and those are detailed in the explanatory note to which I have referred, and on that account I do not propose to refer to them in any detail at this stage.

Sir, the second amendment of importance which is proposed by this Bill is the raising of the amount of an employee's claim to which priority is given in the distribution of his bankrupt employer's assets - the raising of his priority claim from $250 to $1,000 - and linked with that amendment, Sir - which is made by clause 5, the proposed new paragraph (c) of section 43 of the Bankruptcy Ordinance, - is an amendment which gives priority to wages earned during the period of five months as against the existing period of four months immediately preceding the date of the receiving order; or - and this is new - during any period of five months within the twelve months preceding that date where the employee's services have been determined before that date.

Now, Sir, the opportunity has also been taken, in drafting this amending Bill, to insert provision to give priority to income tax in the distribution of a bankrupt's property; and a further provision which is included in the Bill is that made by clause 8, which is designed to enable deductions, which are made from a bankrupt's salary or wages for the benefit of his creditors, to be made in accordance with the scale to be prescribed by the Minister. These deductions, Sir, will, of course, remain, subject to variation by the Court. This amendment, Sir, is also considered to be necessary because the existing scale is thought to be out of date by reason of the fall in the value of money which has taken place, particularly since the war.

I think I should also refer at this stage, Sir, to the proposal made by clause 5 (ii), the clause against which there is a marginal note "Transitional provisions". With reference to that, I would say very little more than appears at the end of the explanatory note and merely content myself with indicating that the purpose of those provisions is to provide for the application of the amendments relating to preferential payments, to which I have referred and which are proposed by clause 5 (i), to cases already under the administration of the Official Assignee where no dividend has been declared and no distribution of assets has begun, but that those preferential amendments should apply on a date to be appointed under the clause.

Sir, I think there is very little which I need add now in moving the Second Reading. I would like just to say this: that it is the view of the Government that if the Bill is passed, it will go a long way towards bringing the Bankruptcy Ordinance up to date so far as changes in the value of money are concerned, and it will remedy those parts of the Bankruptcy Ordinance which are in this respect considered to be obsolete. The amendments proposed, Sir, will improve the position of employees who claim for wages from a bankrupt employer and will also prevent the somewhat drastic process of bankruptcy being used for debts, which, by reason of the change in the value of money, are too small to justify such a course. For these reasons, Sir, I hope that the measure will be welcomed by all sides of this Assembly, and I accordingly beg to move.

Question proposed.

Mr Lim Koon Teck (Paya Lebar): Mr Speaker, Sir, I rise to support the Bill before the House. We should do all we can to protect the unfortunate man who is employed by a firm which goes into bankruptcy. Only too often have we found that the employees of such firms have been thrown into the street not because of their own fault but through adverse circumstances over which they have no control.

The only possible argument in my mind that can be made against this motion is that some creditors would say we are favouring the employees at the expense of the creditors, but I do not think that this argument could hold water. After all, the creditor can choose whether he will or will not give credit to the debtor, whereas the employee is not in a position to do so. I therefore support this amendment.

The Chief Minister: Mr Speaker, Sir, I am very happy to hear from the Opposition support for an amendment of this character, and I feel I should like to add to what has been said from practical experience. As a result of my Saturday sessions, Sir, I have learnt that there are at the present moment groups of workers who have been waiting for more than eleven months for their pay. Unfortunately, what has occurred is this - they were not paid for several months and finally they left of their own accord the employment of an employer who was not paying them; but it took the employer's creditors a number of months before he was made bankrupt and the receiving order was made in May of this year, although they themselves left his employment last December. In those circumstances, Sir, those poor people have not been able to receive any part of their salary and rank merely as creditors to receive pro rata parts of the assets of the firm when it is wound up. I feel, Sir, that they are deserving of the sympathy of this House, and I am happy to note that this House is not quibbling either about the increase from $250 to $1,000. $250 may have been appropriate during the time, Sir, when you could get a cook for $30 and $40 a month, but it is hardly appropriate now.

I am particularly happy to note that the Assembly is not making any adverse comment in view of the short notice given. It is a simple Bill. Its urgency lies in the fact that there are a fair number of human beings who are suffering at the moment as a result of the workings of the Bankruptcy Ordinance, and it is desired to give them redress at the earliest possible moment.

Mr G. A. P. Sutherland (Nominated): . Mr Speaker, Sir, I rise briefly to support the amendment. I have not had time to study the Bill, but the explanations given by the Hon. the Attorney-General appear to be quite satisfactory; but I would like to put on record my congratulations to Government in realising that there are two kinds of dollars - pre-war dollars and post-war dollars.

Question put, and agreed to.

Bill accordingly read a Second time.