KUALA LUMPUR (March 11): The Singapore Court of Appeal has upheld a ruling that foreign liquidators cannot sue Standard Chartered Bank and BSI Bank over 1Malaysia Development Bhd (1MDB)-linked transactions that occurred before 2018, the year Singapore’s cross-border insolvency law came into effect.
The court dismissed an appeal by the liquidators of Blackstone Asia Real Estate Partners and Brazen Sky, both of which are tied to the 1MDB scandal.
The liquidators, Angela Barkhouse and Toni Shukla, are “disappointed by the result”, they said in a statement on Wednesday, but noted “possible workarounds” in their attempts to recover assets they allege were wrongly moved.
“One of these workarounds is to apply directly to wind up the relevant British Virgin Island (BVI) entities in Singapore, following which the statutory claims can be brought, as they are available to the liquidators of all companies being wound up in Singapore,” the liquidators said.
“Concurrent with the appeal, the liquidators had applied to have the BVI entities wound up locally in Singapore, and the winding-up hearing is expected to take place in the next few weeks.
“Once the orders are made, the statutory claims will be filed against the respondents in short order,” they added.
Barkhouse and Shukla said the statutory claims will be pursued in addition to other separate and ongoing claims, including claims for dishonest assistance, breach of the banks’ duties of reasonable skill and care, and/or breach of their banking mandate to the companies.
“Both banks have tried, but failed, to strike out the company claims, which are progressing in the Singapore courts. The claim against BSI Singapore and its former employees is being heard in the Singapore International Commercial Court and trial has been fixed for March 2027,” they noted.
“The liquidators remain steadfast in their pursuit of justice and accountability in respect of those who facilitated the fraudulent acts that deprived the creditors of the companies, to which they were appointed, and to hold those responsible to account,” they said.
High Court decision
The liquidators had attempted to recover the alleged 1MDB assets via avoidance claims, a legal tool to undo suspicious transactions.
However, High Court judge Aidan Xu pointed to Article 23(9) of Singapore’s Insolvency, Restructuring and Dissolution Act, which blocks such claims for deals made before the law was introduced in 2018.
The transactions in question took place before that date.
Although Xu described the transactions as “apparently dubious”, he underlined the law clearly limits what the court can do. He noted that parliament has enacted the law, and as such, the court must give effect to what the law lays down.
Xu dismissed the applications to establish standing to pursue the avoidance claims in the High Court, which was upheld in the Court of Appeal.