Singapore Sees Surge in Business Liquidations!

 

A growing number of businesses are going belly up in Singapore. More companies were liquidated in the first half of 2025 than in the same period in the last five years. From January to June 2025, 187 firms were forced by the courts to wind up. This is up from 146 in the same period last year and 95 the year before. Industries like food and beverage, interior design and construction have been the hardest hit, say debt collectors and liquidators. Singapore also hit a 15-year high in the number of compulsory liquidations – 307 – last year.

 

Source: https://www.investopedia.com

Liquidation is the last resort as it typically recovers only a fraction of the amount owed - sometimes as low as 10 per cent. The process involves a company’s assets being seized and realised, with the resulting proceeds used to pay off its debts and liabilities. Cash flow problems are a key reason why companies go bust. This means they do not have enough money coming in to cover what they owe, even if they have assets on paper. Businesses also dealt with rising interest rates between 2022 and 2024, with rates beginning to ease only in 2025. 

Challenges such as rental costs, demand uncertainty and manpower will continue to plague businesses. But there is strong momentum in new business formation, with more companies being registered this year than last year. 

Singapore’s economic growth is also expected to weaken in the second half of the year due to global headwinds, which could spill over into domestic oriented sectors such as retail and F&B. In April, the Ministry of Trade and Industry downgraded the country’s gross domestic product growth forecast for 2025 to 0 per cent from 2 per cent.

 

In the US, elevated interest rates helped push Chapter 11 bankruptcy filings to their highest level in eight years in 2024. High volume of restructurings will continue in the first half of 2025. Over the last two years, higher borrowing costs have eroded capital and liquidity for many companies. Softening consumer spending, especially in sectors such as retail and restaurants could push distressed companies in those industries could be pushed over into bankruptcy as a result. 

In Malaysia, data is dated. More than 2,600 cases were report in 2022. About 10% were government-owned companies. About 99% cited inability to repay their loans. Of those wound-up, 59% of the companies belonged to non-Bumiputras. Selangor and Federal Territories had the greatest number of cases. About 50% were in the trade, wholesale and retail sectors. This was followed by those in construction. With growing market uncertainty, it is good for the Government to plan for a stabilisation fund for SMEs. 

Reference:

Singapore sees surge in business liquidations; figure hits 5-year high in first half of 2025, Sherlyn Seah, Louisa Tang, CNA, 31 July 2025 

Restructuring 2025 Outlook, PWC