Still, the number of cases of liquidation and its alternatives may not fully reflect the number of firms under financial pressure, said Mr Thio Shen Yi, senior counsel and joint managing director of TSMP Law.

“When times are very bad, companies just don’t have the money. If creditors wind them up, and there is nothing, they still incur legal fees. So the creditors may not bother.”

But in a situation where the economy is a bit better, creditors may make a court winding-up application as it could be an effective way of getting a debtor to pay up.

“In this environment, liquidation might be a last resort, or resorted to when there is suspicion of management wrongdoing. Certainly, among the local banks at least, you see greater sensitivity to the different types of restructuring options available,” Mr Thio added.

Read more at The Straits Times