Third-party funding in Singapore has taken a step forward after a court in the city ruled to allow a commercial litigation funding arrangement to proceed.
The ruling by Singapore High Court justice Chua Lee Ming on September 11 will allow the funding of investigations and potential claims to proceed against collapsed Indonesian telco Trikomsel.
Funds associated with IMF Bentham are paying for investigations and potential claims led by Luke Furler and Cameron Duncan of KordaMentha, liquidators of two Singapore-based Trikomsel subsidiaries that were used to raise more than S$200million in the Singapore bond market.
“Justice Chua’s decision is an important step forward in the interests of the Trikomsel bondholders,” said Tom Glasgow, IMF Bentham’s chief investment officer for Asia. “Without IMF Bentham’s funding, the liquidators’ investigations and any resulting proceedings could not be pursued.”
Trikomsel suffered a sudden financial collapse in 2015-2016 and the bonds were not repaid, resulting in substantial losses for Singaporean investors.
The decision follows legislation passed in 2017 that abolished certain barriers to the funding of commercial disputes and clarified the validity of funding in Singapore-seated international arbitrations. This most recent ruling complements a 2015 decision regarding Vanguard Energy that approved funding by former shareholders in an action arising out of an insolvency.
“This is an important ruling building on the court’s decision in Re Vanguard,” said Ashok Kumar, a director of BlackOak and insolvency specialist, who represented the liquidators in the hearing. “It confirms that commercial funding of claims arising out of an insolvency is permitted in Singapore and provides direction in an area that is fast developing in Singapore. This is a helpful decision for all of us operating in this space.”
IMF’s Glasgow said the decision will also have wider implications for the pursuit of investigations and claims arising out of failed corporations in Singapore.