Wang Aifeng v Sunmax Global Capital Fund 1 Pte Ltd [2022] SGHC 271
The Court (per Goh Yihan JC) in this decision considered the principles for granting permission to continue or commence legal action against a bankrupt individual under s 327(1)(c)(ii), IRDA.
The Court observed that the policy behind which involves an insolvent individual is the same policy which applies to the grant of permission to continue or commence proceedings against an insolvent company:
“it is to prevent the company from being further burdened by expenses incurred in defending unnecessary litigation. The main focus of a company and its liquidators once winding up has commenced should be to prevent the fragmentation of its assets and to ensure that the interests of its creditors are protected to the fullest extent. In other words, returns to legitimate creditors should be maximised; the process of collecting assets and returning them to legitimate creditors should be attended to with all practicable speed. …” (at [29]-[30], citing Korea Asset Management Corp v Daewoo Singapore Pte Ltd (in liquidation) [2004] 1 SLR(R) 671)
At [32]: the relevant factors a court should consider in the exercise of its discretion whether to grant permission for the continuation or commencement of proceedings against a bankrupt under s 327(1)(c)(ii) are:
(a) the timing of the application for permission.
(b) the nature of the claim–must be a type which should proceed by action and not proof of debt or where other parties are involved: [35].
(c) the existing remedies: whether the claim can be dealt with under the bankruptcy regime or whether the assets will be dissipated by attending to the claim and reasons for wanting to proceed outside the insolvency scheme.
(d) the merits of the claim–“serious question to be tried”: [40].
(e) the existence of prejudice to the creditors or to the orderly administration of the bankruptcy.
(f) other miscellaneous factors such as the potential of an avalanche of litigation being unleashed by the grant of permission, the proportionality of the cost of the proceeding to the bankrupt’s resources, and the views of the majority creditors.
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https://www.singaporelawwatch.sg/Portals/0/Docs/Judgments/2022/[2022]%20SGHC%20271.pdf