Terraform Labs Pte. Ltd.

Terraform Labs Pte Ltd (TFL) restructured under Chapter 11 in the United States Bankruptcy Court for the District of Delaware. Its confirmed plan was recognised in Singapore under the Model Law on Cross-Border Insolvency, as given effect by the Insolvency, Restructuring and Dissolution Act 2018, by order ORC 13, entered on 28 January 2025 in Originating Application No 5 of 2024. Paragraph 4 of ORC 13 barred proceedings against TFL on claims compromised under the plan, save for SIC/OA 3/2024, a representative action brought by the Beltran Parties. Their claims were placed in a secured class with recourse to an escrow fund of USD $56,948,675.49 held by the court; other crypto loss claimants were in an unsecured class.

A group of such claimants, the non-parties, who said they had lost money through alleged misrepresentations by TFL, applied in SIC/SUM 19/2025 to join OA 3 as claimants, despite a warning from TFL that this breached ORC 13. TFL applied in SIC/SUM 26/2025 to strike out SUM 19. After a hearing on 6 May 2025 the court struck out SUM 19 as against TFL; the non-parties later withdrew it against the other defendants. The court reserved costs, and TFL sought $74,200, being $60,000 in costs and $14,200 in disbursements.

1. Whether the non-parties' joinder application was brought in breach of the recognition order and should be struck out as against TFL.
2. Whether TFL should recover the full costs and disbursements it claimed for enforcing the recognition order.
3. Whether the non-parties' claimed good faith and losses justified a lower award.

The court held that the non-parties, knowing of ORC 13, began SUM 19 in defiance of its injunction without seeking leave. Their evident aim was to move from the unsecured class into the secured class and reach the escrow, which was impossible without amending the plan. SUM 19 also appeared to lack merit on its own, coming close to trial and facing opposition from all sides.

On costs, the court applied O 22 r 3 of the SICC Rules 2021 and Senda International Capital Ltd v Kiri Industries Ltd [2023] 1 SLR 96: a successful party recovers costs sensibly and reasonably incurred, and once it shows how they arose the burden shifts to the other side. The claimed sum was reasonable because the application formed part of a cross-border restructuring needing Singapore and US counsel, it had to be run quickly before the OA 3 trial, and, most of all, SUM 19 should never have been brought. TFL had offered a way out before incurring costs, which the non-parties rejected.

The non-parties did not challenge the figures. Their claim that they only realised the breach at the hearing was hollow given the earlier warning, their counsel's later restraint came too late, and their crypto losses were shared by all claimants and did not mitigate. The court stressed that recognition orders must be strictly observed.

The court allowed TFL's application in part, declaring that SUM 19 was commenced in breach of ORC 13, striking it out and dismissing it as against TFL, and ordering that no one may take a step to join OA 3 against TFL without leave. It ordered the non-parties to pay costs and disbursements of S$74,200, jointly and severally.