Transactions defrauding creditors
Open ↗438.—(1) This section relates to any transaction entered into by a person (called in this section and section 439 the debtor) with another person at an undervalue.
(2) For the purposes of subsection (1), a debtor enters into a transaction with another person at an undervalue if —(a)
the debtor makes a gift to the other person or the debtor otherwise enters into a transaction with the other person on terms that provide for the debtor to receive no consideration;
(b)
the debtor enters into a transaction with the other person in consideration of marriage; or
(c)
the debtor enters into a transaction with the other person for a consideration the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by the debtor.
(3) Where a debtor enters into a transaction at an undervalue, the Court may, if satisfied under subsection (4), make such order as the Court thinks fit for —(a)
restoring the position to what it would have been if the transaction had not been entered into; and
(b)
protecting the interests of any person who is, or is capable of being, prejudiced by the transaction (called in this section a victim).
(4) An order under subsection (3) may only be made if the Court is satisfied that a transaction at an undervalue was entered into by a debtor for the purpose —(a)
of putting assets beyond the reach of a person who is making, or may at some time make, a claim against the debtor; or
(b)
of otherwise prejudicing the interests of any person in relation to a claim which the person is making or may make against the debtor.
(5) An application for an order under subsection (3) must not be made in relation to a transaction except —(a)
in a case where the debtor has been adjudged bankrupt under Part 16, by the Official Assignee, the trustee in bankruptcy or (with the permission of the Court) a victim of the transaction;[Act 25 of 2021 wef 01/04/2022]
(b)
in a case where a victim of the transaction is bound by a voluntary arrangement approved under Part 14, by the nominee of the voluntary arrangement or by any person who (whether or not so bound) is such a victim;
(c)
in a case where the debtor is a company that is being wound up under Part 8 or is in judicial management under Part 7, by —(i)
the Official Receiver;
(ii)
the liquidator or judicial manager (whichever is applicable); or
(iii)
a victim of the transaction; and
(d)
in any other case, by a victim of the transaction.
(6) An application made under subsection (5) is deemed to be made on behalf of every victim of the transaction.
Provisions which may be made by order under section 438
Open ↗439.—(1) Without limiting section 438(3) but subject to subsection (2), an order made under that section with respect to a transaction may —(a)
require any property transferred as part of the transaction to be vested in any person, either absolutely or for the benefit of all the persons on whose behalf the application for the order is deemed to be made;
(b)
require any property to be so vested in any person, either absolutely or for the benefit of all the persons on whose behalf the application for the order is deemed to be made, if the property represents, in any person’s hands, the application either of the proceeds of sale of property transferred as part of the transaction or of money so transferred;
(c)
release or discharge (in whole or in part) any security given by the debtor;
(d)
require any person to pay to any other person in respect of benefits received from the debtor such sums as the Court may direct;
(e)
provide for any surety or guarantor whose obligations to any person were released or discharged (in whole or in part) under the transaction to be under such new or revived obligations as the Court thinks appropriate; and
(f)
provide for security to be provided for the discharge of any obligation imposed by or arising under the order, for such an obligation to be charged on any property and for such security or charge to have the same priority as a security or charge released or discharged (in whole or in part) under the transaction.
(2) An order under section 438 may affect the property of, or impose any obligation, on any person whether or not that person is the person with whom the debtor entered into the transaction, but must not —(a)
prejudice any interest in property which was acquired from a person other than the debtor and was acquired in good faith, for value and without notice of the relevant circumstances, or prejudice any interest deriving from such an interest; and
(b)
require a person who received a benefit from the transaction in good faith, for value and without notice of the relevant circumstances to pay any sum unless the person who received the benefit was a party to the transaction.
(3) For the purposes of this section, the relevant circumstances in relation to a transaction are the circumstances by virtue of which an order under section 438 may be made in respect of the transaction.
(4) In this section, “security” has the meaning given by section 61(1).
(5) Any reference in this section to the person or property of a debtor or bankrupt is, in relation to a debtor which is a firm or to a firm against which a bankruptcy order has been made (as the case may be), to be read as a reference to the person or property of each partner of the firm.
Certain contractual rights limited
Open ↗440.—(1) No person may, at any time after the commencement and before the conclusion of any proceedings by a company, or at any time after the date of commencement of the simplified debt restructuring programme for a company until the time the compromise or arrangement becomes effective in accordance with section 72M(16) or the time the company is discharged from the simplified debt restructuring programme (whichever is earlier) —(a)
terminate or amend, or claim an accelerated payment or forfeiture of the term under, any agreement (including a security agreement) with the company; or
(b)
terminate or modify any right or obligation under any agreement (including a security agreement) with the company,
by reason only that the proceedings are commenced, the company is insolvent, or the company has entered the simplified debt restructuring programme.
[Act 3 of 2025 wef 29/01/2026]
(2) Nothing in this section is to be construed as —(a)
prohibiting a person from requiring payments to be made in cash for goods, services, use of leased property or other valuable consideration provided after the commencement of the proceedings or the entry of the company into the simplified debt restructuring programme; or[Act 3 of 2025 wef 29/01/2026]
(b)
requiring the further advance of money or credit.
(3) Any provision in an agreement that has the effect of providing for, or permitting, anything that, in substance, is contrary to this section is of no force or effect.
(4) On an application by a party to an agreement, the Court may declare that this section does not apply, or applies only to the extent declared by the Court, if the applicant satisfies the Court that the operation of this section would likely cause the applicant significant financial hardship.
(5) Subsection (1) does not apply in respect of any legal right under —(a)
any eligible financial contract as may be prescribed;
(b)
any contract that is a licence, permit or approval issued by the Government or a statutory body;
(c)
any contract that is likely to affect the national interest, or economic interest, of Singapore, as may be prescribed;
(d)
any commercial charter of a ship;
(e)
any agreement within the meaning of the Convention as defined in section 2(1) of the International Interests in Aircraft Equipment Act 2009; or
(f)
any agreement that is the subject of a treaty to which Singapore is party, as may be prescribed.
(6) In this section —“company” means any corporation liable to be wound up under this Act, but excludes such company or class of companies as the Minister may by order in the Gazette prescribe;
“essential service” has the meaning given by section 2(1) of the Cybersecurity Act 2018;
“national interest” includes national defence, national security, public security and the maintenance of any essential service;
“proceedings” means any proceedings arising from —(a)
any application under section 210(1) of the Companies Act 1967 for the approval of the Court in relation to any compromise or arrangement between a company and its creditors or any class of those creditors;
(b)
any application under section 71 for the approval of the Court in relation to any compromise or arrangement;
(c)
any application for an order under section 64 or 65;
(d)
any application for a judicial management order under section 91; or
(e)
the lodgment of a written notice of the appointment of an interim judicial manager under section 94(5)(a).
Source: Singapore Statutes Online (Attorney-General's Chambers), © Government of Singapore.
