Insolvency and winding up in Singapore
When your employer becomes insolvent, it can no longer pay its debts, and in a winding up a liquidator takes over to sell what is left and pay creditors in a fixed order. If you are an employee owed wages, you sit near the top of that order: your unpaid wages are a preferential debt, paid ahead of ordinary unsecured creditors, up to the lower of 5 months’ salary or $13,000. If you are another creditor, you file a proof of debt to claim your share. This guide explains where you stand and what to do, with the rules from the Insolvency, Restructuring and Dissolution Act 2018, the Singapore Courts, and the Insolvency Office.
Free consultation
Speak with an employment lawyer · no cost, no obligation
Step 1 of 2
What insolvency and winding up mean for you
Insolvency means a company can no longer pay its debts as they fall due. Winding up, also called liquidation, is what usually follows. The Singapore Courts describe it as the process by which a company’s assets are collected and sold to pay off its debts, with anything left over going to the shareholders. At the end the company is dissolved and no longer exists.
A liquidator runs that process. Once appointed, the liquidator takes control of the company from its directors, gathers in the assets, checks the claims against the company, and pays them out in the priority order the law sets. For you as an employee, the practical effect is blunt: because the company is closing for good, your job normally ends, and money you are owed becomes a debt you claim from the liquidation rather than a wage that keeps arriving. If your role was made redundant on the way down, the rules on a retrenchment benefit still shape what you can claim.
Unpaid wages and your priority as a creditor
Here is the part that matters most if you are owed money. Under section 203 of the Insolvency, Restructuring and Dissolution Act 2018, certain employee debts are preferential, which means they are paid in priority to all other unsecured debts once the costs of the winding up are covered. Your unpaid wages come high on that list, ahead of the ordinary suppliers and lenders who have no security.
There is a cap. Section 203 says the amount is limited to what the Minister prescribes, and the Maximum Amount Payable in Priority Order 2020 sets that figure at the lower of 5 months’ salary or $13,000 for each employee. So if you are owed more than the cap, the amount up to the cap is preferential and the rest ranks with the ordinary unsecured creditors. The Act counts money due during or in place of your notice period as part of "wages or salary" for this purpose.
Wages are not the only preferential employee debt. Section 203 lists the order below, and each rung is paid in full before the next receives anything. A fixed queue, top to bottom.
| Rank | Debt |
|---|---|
| 1st to 3rd | Costs and expenses of the winding up, the liquidator’s remuneration, and the cost of the person who applied for the winding-up order |
| 4th | Unpaid wages or salary (capped at the lower of 5 months’ salary or $13,000 per employee) |
| 5th | Retrenchment benefit or ex gratia redundancy payment (subject to the same cap) |
| 6th | Work injury compensation under the Work Injury Compensation Act 2019 |
| 7th | CPF and other superannuation or provident fund contributions the employer owed |
| 8th | Pay for accrued but unused vacation leave (subject to the same cap) |
| 9th | Tax and goods and services tax assessed before the winding up |
Everything in that table is paid before ordinary unsecured creditors see a cent. But two limits are worth keeping in view. First, secured creditors, such as a bank holding a charge over specific assets, are generally paid out of those assets before this list even starts. Second, the list only works through whatever money is actually left. The Insolvency Office is candid that depending on the assets available, creditors may recover only a portion of what they are owed, or nothing at all.
If unpaid salary is your main concern and the company is not yet in liquidation, you may still be able to act directly. See salary claims in Singapore for the route through the Tripartite Alliance for Dispute Management. The Ministry of Manpower says non-payment of salary is an offence and that if you are not paid you can file an employment claim at TADM, and it warns you to file early because there are limits on the amount and the timeline.
Free, no obligation
Owed money by an insolvent employer? Get a free consultation
Tell us what happened and we will pass your details to our independent legal partner, who can review your situation and be in touch. No cost to you.
The winding-up process
A company can be wound up in two ways: voluntarily, by its members or creditors, or compulsorily, by an order of the High Court. In a compulsory winding up, someone applies to court for the order, and the Singapore Courts list who can apply, including the company itself, a director, a creditor, a contributory, an existing liquidator, or a judicial manager.
A common trigger is a company that cannot pay its debts. Under section 125 of the IRDA, a company is deemed unable to pay its debts if it owes a creditor more than $15,000 and, after a written demand, fails to pay or secure the debt within three weeks, as the Singapore Courts set out. Another ground is a creditor who tries to enforce a court judgment against the company and cannot recover the debt. Once the order is made, a liquidator is appointed and the priority rules above take over.
To claim what you are owed, you file a proof of debt with the liquidator. Here is how that runs when the Official Receiver is the liquidator, based on the Insolvency Office’s guidance:
- Wait for the Notice, or contact the liquidatorIf you were listed as a creditor in the company’s statement of affairs, the Official Receiver sends a "Notice to file Proof of Debt" when there are funds to pay a dividend. If you were not listed, write to the liquidator so you are not missed.
- File your proof of debt within 14 daysCreditors who fail to lodge their claim within 14 days of the date of the Notice are excluded from that dividend payment. Do not sit on it.
- Attach your supporting documentsInclude invoices, your employment contract, payslips, and any judgment. The Insolvency Office says a proof of debt without supporting documents may be rejected. Online filing to the Official Receiver carries a $5 fee.
- Keep in touch about the dividendThe Official Receiver informs creditors of significant developments and when a dividend can be declared. Where a private liquidator was appointed instead, deal with them directly.
If your claim is rejected in whole or in part, the liquidator issues a rejection notice, and there is a route to appeal. The mechanics differ between a court winding up and a members’ or creditors’ voluntary winding up, which is one reason larger or contested claims are worth advice.
When to get a lawyer
Plenty of proofs of debt are simple and need no lawyer. It is worth getting advice when the numbers are large, when the priority of your claim is in doubt, or when you are on the other side of the process. Three situations come up often:
- Creditors owed a significant sum: a lawyer can check whether any of your debt ranks as preferential or secured, prepare the proof of debt, and advise on a statutory demand or a winding-up application where the company owes you more than $15,000.
- Directors of a company in trouble: once insolvency looms, directors face duties and personal-liability risks, including for wrongful or fraudulent trading. Early advice on the options, including judicial management or a voluntary winding up, can matter a great deal.
- Employees owed wages, notice pay, or a retrenchment benefit: a lawyer can work out what falls inside the preferential cap, whether to pursue a salary claim before liquidation, and how to file so you are not shut out of the dividend.
Timing counts in insolvency. Proof-of-debt windows are short, and a moratorium during judicial management can freeze your ability to chase the debt without the court’s permission. If you are not sure which process applies or where your claim ranks, the broader employment dispute process sets out the wider picture, and a short conversation with a lawyer can tell you quickly whether it is worth acting now.
Free, no obligation
Employer insolvent or winding up? Get a free consultation
Tell us what happened and we will pass your details to our independent legal partner, who can review your situation and be in touch. No cost to you.
Frequently asked questions
What happens to my job if my employer is wound up?
When a company is wound up it is dissolved and stops existing, so employment normally ends. The Singapore Courts describe winding up as the process where a company’s assets are collected and sold to pay off its debts, after which the company no longer exists. Any wages, notice pay, or retrenchment benefit you are still owed becomes a debt you claim in the liquidation rather than a salary you keep receiving.
Are my unpaid wages protected if my employer goes insolvent?
Yes, up to a limit. Under section 203 of the Insolvency, Restructuring and Dissolution Act 2018, unpaid wages are a preferential debt, paid ahead of ordinary unsecured creditors in a winding up. The amount is capped at the lower of 5 months’ salary or $13,000 per employee under the Maximum Amount Payable in Priority Order 2020. Anything you are owed above that cap drops down and ranks as an ordinary unsecured debt.
How do I claim money my insolvent employer owes me?
You file a proof of debt with the liquidator. Where the Official Receiver is the liquidator, the Insolvency Office says it sends a "Notice to file Proof of Debt" to creditors listed in the company’s statement of affairs, and you must lodge your claim within 14 days of that notice or be left out of the dividend. Keep your employment contract, payslips, and any letters, because a proof of debt without supporting documents can be rejected.
Will I get everything I am owed?
Not always. A preferential debt is only paid if assets are left after secured creditors are satisfied. The Insolvency Office notes that depending on the assets available, creditors may receive only part of what they are owed, or nothing at all. Filing your claim early and in full gives you the best chance at whatever dividend the liquidator declares.
When can a company be wound up for not paying a debt?
A creditor can apply to the High Court to wind up a company that cannot pay its debts. Under section 125 of the Insolvency, Restructuring and Dissolution Act 2018, a company is deemed unable to pay its debts if it owes a creditor more than $15,000 and fails to pay or secure the debt within three weeks of a written demand, as the Singapore Courts set out. Other grounds include a failed attempt to enforce a court judgment against the company.
Work Rights SG provides general information about employment rights in Singapore. It is not legal advice and does not create a lawyer–client relationship. It is a free service that connects you with an employment law firm; we do not provide legal advice ourselves. For advice on your situation, speak to a qualified employment lawyer.