27 March 2024

Kyen Resources Pte Ltd (in compulsory liquidation) & Ors v Feima International (Hongkong) Ltd (in liquidation) and another matter [2024] SGCA 7

On 5 March 2024, in Kyen Resources Pte Ltd (in compulsory liquidation) & Ors v Feima International (Hongkong) Ltd (in liquidation) and another matter, the Singapore Court of Appeal (“SGCA”) decided three major points of law for the first time.

First, that a crossclaim by a company in liquidation cannot be accounted for in the adjudication of an unsecured creditor’s proof of debt in circumstances where a set-off is not available.

Second, when liquidators assert a significantly disputed or factually complex crossclaim by the company in liquidation, it may be inappropriate for the liquidator to summarily deal with it in the adjudication process. In such circumstances, the liquidators should apply to court for directions on the manner or mode by which the crossclaim should be resolved.

Third, the SGCA decided important questions of transnational issue estoppel. Among other things, that in cases where the same crossclaim is being asserted in two different jurisdictions for different purposes, such as where the claim is being pursued in different liquidations under different laws, then the doctrine of res judicata does not apply, and no forum election needs to be made.

The SGCA dismissed the appeal in favour of the respondent (“Feima”), awarding costs to Feima.

Allen & Gledhill Partner Alexander Lawrence Yeo acted for Feima.


The first appellant (“Kyen”) was placed into liquidation in Singapore on 5 August 2019. It was principally involved in the trading of commodities and foreign currency derivative instruments.

Feima was placed into liquidation in the Hong Kong Special Administrative Region on 31 July 2019. It was principally involved in the trading of coal and copper cathodes.

Kyen and Feima were members of a group of companies, where Feima owned 86% of the shares in Kyen and shared common directors with Kyen. In addition, pursuant to a Management and Administrative Services Agreement, Feima agreed to provide Kyen certain management and administrative support services.

On 2 September 2020, the Feima Liquidators lodged a proof of debt for US$49,355,996.30 which comprised various sums due from Kyen to Feima for goods sold and delivered by Feima to Kyen.

On 23 July 2021, the Kyen Liquidators rejected Feima’s proof of debt on alternative grounds. First, that Kyen had alleged dishonest assistance and/or knowing receipt crossclaims (“Crossclaims”) against Feima arising from various transactions between Kyen and other companies for allegedly no consideration at all, which caused loss to Kyen (“Third-Party Transactions”). This was the primary ground. Second, that there was insufficient evidence to support the claim in Feima’s proof of debt to the extent of US$44,900,112.83.

Feima appealed the rejection of its proof of debt by the Kyen Liquidators to the General Division of the High Court. The High Court agreed with Feima’s position, and admitted Feima’s proof of debt to the extent of US$32,079,540.97, being the sum pursued by Feima before the High Court judge.

The core issue before the SGCA was whether the Kyen Liquidators were wrong to take into account Kyen’s Crossclaims in adjudicating Feima’s proof of debt.

A secondary issue arose before the SGCA as well. After Kyen failed in the High Court, it filed a proof of debt for the same Crossclaims in Feima’s liquidation in Hong Kong. Feima’s liquidators rejected the said proof of debt. Feima then argued that Kyen was estopped from asserting the same Crossclaims in Singapore because their proof of debt in Hong Kong had been rejected, or alternatively that it was improper for Kyen to seek two bites at the cherry by raising the same claims in Singapore and Hong Kong.

Singapore Court of Appeal decision

The SGCA held that the Kyen Liquidators were not entitled to account for the Crossclaims when adjudicating Feima’s proof of debt. The SGCA reasoned as follows:

  • In substance, what the Kyen Liquidators sought was to set-off the Crossclaims against Feima’s claim in order to reject Feima’s proof of debt.
  • The only set-off that was raised was an insolvency set-off under section 327(2) of the Companies Act (Cap 50, 2006 Rev Ed) read with section 88(1) of the Bankruptcy Act (Cap 20, 2009 Rev Ed) (both provisions are presently found in section 218 and section 219 of the Insolvency, Restructuring and Dissolution Act 2018). The SGCA agreed with the High Court’s findings that Kyen’s Crossclaims for dishonest assistance and knowing receipt could not be the subject of insolvency set-off because there were no mutual credits, mutual debts, or other mutual dealings as regards the claim in Feima’s proof of debt and the Crossclaims. The crux of Kyen’s complaint was essentially that the Third Party Transactions were wrongful because they were disposals for no consideration. If so, the SGCA agreed with the High Court’s decision that this would constitute a misappropriation of company assets which would not satisfy the requirement that there be a “mutual dealing”, citing UK caselaw stating that “the thief who steals my watch does not deal with me. Similarly, the man who steals money from a company does not obtain the money by a dealing”. To permit a set-off in these circumstances would be unfair as it would favour the person who misappropriated the company assets, and the wrongdoer could evade the consequences of this by recovery through set-off instead of having to prove in the winding up in competition with other creditors.
  • In addition, there was no basis in precedent or policy to support the appellants’ argument that liquidators had a general entitlement to account for the company’s crossclaims against its creditor when adjudicating the creditor’s proof of debt, unless the crossclaim fell within the ambit of an established form of set-off.

Interestingly, the SGCA stopped short of expressing a conclusive view on whether insolvency set-off is the only form of set-off permitted in the proof of debt process, to the exclusion of other forms of set-off such as equitable set-off. The SGCA made clear that if this is an issue arising for determination in future, any set-off should be justified in principle.

The above holdings were sufficient to dispose of the appeal by Kyen, in Feima’s favour. However, the SGCA added observations on the secondary issue of Kyen’s conduct in filing a proof of debt for the same Crossclaims in Feima’s liquidation in Hong Kong. The SGCA held that the appellants were not estopped by the doctrine of res judicata from pursuing the same Crossclaims in the Singapore liquidation of Kyen, even after their proof of debt (for the same Crossclaims) had been rejected in the Hong Kong liquidation of Feima. This was because of the transnational nature of the dispute in question, and the unique fact that it involved two separate liquidations under two different laws and jurisdictions. The SGCA held that in these specific circumstances, the doctrine of res judicata does not apply, and no forum election needs to be made. Accordingly, the Crossclaims were properly asserted before the Singapore and Hong Kong courts for different purposes and the proceedings were distinct in nature.


This decision imposes important limits on when and how liquidators can assert crossclaims of the company in liquidation in order to defeat claims in a creditor’s proof of debt. In particular, for substantially disputed and factually complex crossclaims, liquidators should not use the summary determination process of proof of debt adjudication to act as judge, jury and executioner of their own alleged crossclaims.

The decision also clarifies the law on transnational issue estoppel in insolvency proceedings, in particular, where there are different insolvency proceedings ongoing in different jurisdictions. As businesses become global and chain-insolvencies (especially within multinational corporate groups, such as in this case) become more common, the issues dealt with in this judgment will take on increasing importance.

Reference materials

The judgment is available on the Singapore Courts website www.judiciary.gov.sg.