In the recent landmark decision of Re Vanguard Energy Pte Ltd [2015] SGHC 156, the Singapore High Court confirmed that litigation funding may, in the context of insolvency and under the appropriate circumstances, be permitted in Singapore.

Re Vanguard Energy Pte Ltd [2015] SGHC 156

On 14 July 2015, the Bankruptcy (Amendment) Bill 2015 (the “Bill”) was passed in Parliament. It is not yet in force. The Bill will amend the Bankruptcy Act to create a more rehabilitative regime for bankrupts and ensure better utilisation of public resources.

When the Bill comes into force, it will effect the following changes to the Bankruptcy Act:

Introduction

The case of Re Vanguard Energy Pte Ltd was heard in Singapore recently, with judgment handed down by the High Court on 9 June 2015.

Of significance to liquidators and underlining the importance of this case to the insolvency profession in Singapore, Judicial Commissioner Chua Lee Ming stated that “it is undeniable that litigation funding has an especially useful role to play in insolvency situations”.

Key Points This decision brings clarity to liquidators taking appointments in Singapore on a number of aspects.

Singapore’s Court of Appeal has just laid down guidance on how professionals should approach their fee engagements with clients.¹ The judgment reveals an expectation of strict adherence to the terms of the letter of engagement. It also serves as an admonishment to retain a detailed inventory of the work done.

Background

As part of the Singapore Budget 2013, the Ministry of Law has proposed a major review of Singapore's bankruptcy and insolvency regime, with a particular focus on making it easier to discharge personal bankruptcies due to business failure or unsecured consumer credit.

The Insolvency Law Reform Committee will also be finalizing its report on the Omnibus Insolvency Bill soon. This Bill is intended to address certain perceived weaknesses in the existing personal bankruptcy and corporate insolvency mechanisms, resulting in a better and more efficient regime.

The Singapore High Court in Beluga Chartering GmbH (in liq) v Beluga Projects (Singapore) Pte Ltd (in liquidation) & Anor considered whether Singapore liquidators of Singapore-registered subsidiary companies were able to repatriate the applicant's ("Beluga Chartering") Singapore assets to Germany, where Beluga Chartering was incorporated.

This case involved a foreign company, Beluga Chartering GmbH ("Beluga") that had both creditors and assets in Singapore. However, as it had not carried on business here, it had not been required to register as a branch.

In March this year, the High Court in Beluga Chartering¹ addressed a unique provision of Singapore's Companies Act that requires local liquidators to ring-fence a foreign company's assets for the settlement of the debts it incurred in Singapore before they transmit its assets to overseas liquidators and creditors. This decision exploring the implications of section 377 on Singapore's cross-border insolvency legal framework is timely considering the ongoing review of Singapore's insolvency laws.

A summary of the factual background