When does a director first come under a duty to consider the interests of creditors (Creditor Duty)? How should the Creditor Duty be weighed up in a director’s decision on whether to authorise the repayment of shareholder loans and to declare dividends?
In the very recent decision of Foo Kian Beng v OP3 International Pte Ltd (in liquidation) [2024] SGCA 10 (Foo Kian Beng), the Singapore Court of Appeal (CA) sheds light on this important issue and gives practical guidance to directors. Prior to Foo Kian Beng, Singapore, English and Commonwealth courts had not been uniform in describing when the Creditor Duty is first engaged. Potentially confusing and ambiguous terms such as “financially parlous” and “on the verge of…
