TRUE YOGA PTE LTD & 2 Ors v PATRICK JOHN WEE EWE SENG

Facts

True Yoga Pte Ltd, True Fitness (STC) Pte Ltd and True Fitness Pte Ltd were judgment creditors of Mr Patrick John Wee Ewe Seng and obtained a bankruptcy order against him on 6 October 2025 in Originating Application (Bankruptcy) No 2370 of 2025. The private trustees in bankruptcy reported that the estate held assets of $14,595 and that they needed funding to investigate and pursue possible claims, without any guarantee of recovery.

On 9 January 2026 the creditors and the trustees signed a funding agreement. The creditors would provide $70,000 in initial funds, with interest at 5.33% per annum. Any assets recovered with their funding would first repay them, ahead of the trustees' costs and the other creditors. Court approval of that advantage was a condition precedent to the agreement taking effect. In HC/SUM 218/2026, the creditors asked the court to approve the advantage under s 352(6) of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA). The bankrupt's former wife, who claimed to be owed maintenance, opposed the application. Kristy Tan J delivered the judgment ex tempore.

Issues

1. Whether s 352(6) of the IRDA lets the court approve a funding creditor's advantage before any funding is provided and before any asset is recovered, protected or preserved
2. Whether the order sought was one for such prospective approval
3. Whether the court could grant the order under its inherent power

Holding

The court dismissed the application as premature, without prejudice to the creditors bringing a similar application at the appropriate time. It did not decide the objections to the terms of the funding agreement, and the creditors and the former wife were ordered to bear their own costs.

Reasoning

Section 352(6) allows an order only after a creditor has given an indemnity or paid money, and after an asset has been recovered, protected or preserved as a result. The creditors themselves accepted those two preconditions. This matched the view in Yiong Kok Kong v Liu Chien Min and Re Vanguard Energy Pte Ltd on the former winding-up provision. Parliament had since enacted s 204 of the IRDA to allow prospective orders in winding up, but made no similar change for bankruptcy. That reinforced that s 352(6) permits only retrospective orders. The judge saw force in the policy case for prospective orders but held that any change was for Parliament.

The creditors had paid nothing, because the agreement would not take effect until approved, and they had no obligation to provide additional funds. Drawing on Australian cases, the court accepted that a bankrupt's right to sue is an asset and that whether it has been protected or preserved should be judged practically. However, a causal link to the funding must be shown, and the claim must be realised for there to be anything to distribute. None of that could yet be assessed.

Following Chan Yun Cheong v Chan Chi Cheong and AnAn Group (Singapore) Pte Ltd v VTB Bank, inherent power cannot be used where a statute governs the situation. Using it to grant an order that s 352(6) does not permit would be perverse.

From the judgment