A party served with a statutory demand can deal with it in one of several ways: pay the sum, or secure or compound for it to the creditor’s reasonable satisfaction. By doing so, the debtor can block the other party from invoking the statutory presumption of insolvency as the basis for commencing a winding-up application. Securing the claimed sum also has an added significance; the fact that the debtor can do so may go to show that the debtor is, in fact, not insolvent.

But what happens when a winding-up application is filed, and only then does the debtor proceed to secure the sum claimed by paying it as “security” into court, pending the resolution of the disputed debt in a concurrent arbitration? And what happens if the arbitration does not actually resolve the dispute as to the debt? The Singapore Court of Appeal addressed this novel interplay of arbitration and insolvency issues in Singapore Commodities Group Co., Pte. Ltd. v Founder Group (Hong Kong) Ltd (in liquidation) [2025] SGCA 35.

This update dives into the apex court’s decision and highlights its crucial guidance on the procedural rules governing the conditional nature of payments into court, the evidential threshold for entitlement, and the broader consequences for Singapore’s insolvency framework, including the application of the pari passu principle and the treatment of unsecured creditor claims.

Adnaan NOOR
Partner – Restructuring & Insolvency and Special Situations Advisory
d +65 6416 2477
e adnaan.noor@wongpartnership.com
Click here to view Adnaan’s CV.

Eden LI
Partner – Restructuring & Insolvency and Special Situations Advisory
d +65 6517 3766
e eden.li@wongpartnership.com
Click here to view Eden’s CV.