Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com
In Kardachi, Jason Aleksander (as private trustee in bankruptcy of Rajesh Bothra) and another v Deepak Mishra and others [2025] SGHC 218, the Singapore High Court confirmed that leave of court is required to commence arbitration proceedings against bankruptcy trustees regarding a dispute arising out of a post-bankruptcy agreement concluded by the trustees. While permission can be granted retrospectively, the court declined to give it in this case, finding no prima facie arguable case that the trustees had breached the post-bankruptcy agreement in commencing a clawback action against the defendants.
The Singapore High Court has confirmed that the common law requirement to obtain permission of court before commencing arbitration proceedings against bankruptcy trustees applies also to a dispute arising out of a post-bankruptcy agreement, which the trustees entered into during investigations into the bankrupt's dealings.
The claimants in this case were the bankruptcy trustees of a bankrupt individual. They sought assistance from the first defendant (DM), a former business associate of the bankrupt, for their investigation into the bankrupt's pre-bankruptcy dealings. A waiver agreement was concluded in relation to information that DM was to provide. Later, the trustees commenced an insolvency clawback action regarding certain disposals of the bankrupt's assets to the defendants, including DM. DM commenced arbitration against the trustees under the waiver agreement, which he argued prevented the trustees from using the information provided for any collateral purpose, including pursuing clawback actions. The trustees applied to the Singapore court for declaratory and injunctive orders that DM lacked permission from the court to commence the arbitration.
The High Court agreed with the bankruptcy trustees.
In Singapore, there is a common law rule that the court's permission is required before proceedings can be commenced against a liquidator (Excalibur Group Pte Ltd v Goh Boon Kok [2012] 2 SLR 999). The court confirmed that this rule applies also to proceedings (including arbitration proceedings) against a bankruptcy trustee, even where the dispute arises out of a post-bankruptcy agreement, which the trustee entered into (as opposed to a pre-bankruptcy agreement, entered into by the bankrupt).
While the necessary permission may be granted retrospectively, the court declined to give permission here. Contrary to DM's position, it held that there was no prima facie arguable case that the trustees had breached any express or implied contractual duty under the waiver agreement in commencing the clawback action against the defendants.
Finally, even if the arbitration were allowed to proceed, the court indicated that it would have declined DM's request for a case management stay of the clawback action in favour of the arbitration as there was no overlap of issues between the clawback action and the arbitration claims.
This decision demonstrates that post-bankruptcy and post-insolvency agreements may still be subject to insolvency law moratoriums, requiring the court's sanction before a dispute can be referred to arbitration.
Case: Kardachi, Jason Aleksander (as private trustee in bankruptcy of Rajesh Bothra) and another v Deepak Mishra and others [2025] SGHC 218 (10 October 2025) (Aidan Xu @ Aedit Abdullah J). (This judgment only recently became available.)
