Singapore High Court Allows Creditor’s Challenge Against Liquidator's Admission of Another Creditor's Proof of Debt

In the recent case of Park Hotel Group Management Pte Ltd v Aw Eng Hai (in his capacity as a joint and several liquidator of Park Hotel CQ Pte Ltd (in liquidation) and others [2025] SGHC 97, the General Division of the High Court of Singapore allowed a creditor’s challenge against a liquidator’s admission of another creditor’s proof of debt. The court took the opportunity to set out the applicable principles and provided further guidance in its closing observations on what is expected of liquidators in clarifying/explaining the decision to accept a proof of debt.

BACKGROUND

The case of Park Hotel Group Management Pte Ltd v Aw Eng Hai (in his capacity as a joint and several liquidator of Park Hotel CQ Pte Ltd (in liquidation) and others [2025] SGHC 97 concerned an application under r 133(2) of the Insolvency, Restructuring and Dissolution (Corporate Insolvency and Restructuring)Rules 2020 (CIR Rules) by the claimant creditor, Park Hotel Group Management Pte Ltd (PHGM), to expunge or reduce the proof of debt (POD) filed by another creditor, Perpetual (Asia) Ltd (as Trustee of Ascendas Hospitality REIT (AH-REIT)), which was admitted in full by the liquidators in the liquidation of Park Hotel CQ Pte Ltd (PHCQ).

The AH-REIT POD came about following PHCQ’s default in 2020 on its obligations to pay rent and other charges under a lease that it had entered into with AH-REIT on 5 April 2013 for 10 years commencing 28 June 2013 (Lease). After a letter of demand to PHCQ and further correspondences in 2021 to recover the outstanding payments went unmet, AH-REIT informed PHCQ in July 2021 that it would be taking steps to repossess the property, require time to conduct inspections and request for documents, and that Ascott International Management Pte Ltd (AIMPL), a related entity to AH-REIT, would be appointed to take over the hotel operations at the property.

AH-REIT terminated the Lease on 28 August 2021 and took possession of the property. PHCQ was wound up by the court on 19 November 2021. On 1 August 2024, the liquidators informed AH-REIT that they had adjudicated its claims based on the AH-REIT POD totalling $32,066,825.30 against PHCQ and admitted it in full. This decision was conveyed in a one-page letter dated 1 August 2024.

On 2 October 2024, PHGM’s lawyers wrote to the Liquidators to inspect the AH-REIT POD and for a copy of the liquidator’s decision. The requested documents were extended by the liquidators’ lawyers to PHGM’s lawyers on 23 October 2024. From November to December 2024, PHGM challenged five items in the AH-REIT POD and asked the liquidators to reconsider those items. However, the liquidators maintained their position that the AH-REIT POD was properly adjudicated.      

APPROACH TO AN APPLICATION UNDER r 133(2) OF THE CIR RULES

Taking reference from a r 133(1) application where a creditor who is dissatisfied with the liquidator’s decision to reject its POD may apply to court for that decision to be reversed or varied, the court helpfully set out the approach towards a r 133(2) application.

• Pursuant to r 133(2) of the CIR Rules, the court may expunge or reduce a POD upon the application of a creditor or contributory if the liquidator declines to interfere in the matter.
• The court would hear the application de novo and render a decision based on the evidence before it at the time of the application. The court’s function is not merely to say whether the liquidator’s decision is right or wrong but may vary the decision in any way it thinks necessary in light of the evidence before it. Affidavits may be filed by the liquidators and/or company representative(s) to attest to matters which were not raised or were not readily apparent when the POD was submitted and adjudicated.
• Where a bona fide challenge is brought by a disputing creditor, the burden of proof lies on the liquidator to satisfy the court on a balance of probabilities that it had adjudicated the POD properly. In effect, the POD creditor should establish on a balance of probabilities that the POD was rightly admitted.
• The liquidator’s duty is to ensure that the assets of the company are distributed to the creditors who have debts that were genuinely created and remain legally due. In so doing, the liquidator must assess every POD lodged, may call for further evidence in support of the POD, and should support its decision with proper basis and be prepared to defend it when challenged. Equipped with all the information and documents, the liquidator cannot merely claim that the disputing creditor has failed to provide evidence to support its opposition.
• The applicant/disputing creditor must serve the application on the POD creditor to give the latter an opportunity to reply to the application.

PHGM’S APPLICATION

PHGM challenged the following five items of the AH-REIT POD:

• Charges payable during the handover period of the property from 1 July to 27 August 2021 of approximately $2.4 million
• Rental on the property from 28 August 2021 to 27 June 2023
• Property tax incurred by AH-REIT on the property from 28 August 2021 to 27 June 2023
• A claim for “cost for replacement” of $1,555,841
• A claim for “legal cost” of $73,761.50

Charges Payable During Handover Period

While PHGM did not pursue this challenge following belated explanations provided by the liquidators and AH-REIT’s representative by way of affidavit, the court held that it was satisfied that the two-month handover period was not objectionable

Rental from 28 August 2021 to 27 June 2023  

The AH-REIT POD included a claim for rent payable under the Lease from the date of termination by AH-REIT till the end of the agreed rental period under the Lease, less the earned income by AH-REIT in operating the property by appointing AIMPL between 28 August 2021 to 29 September 2022 and from leasing the property to Ascott Hospitality Business Trust (AHBT) from 1 October 2022 onwards. PHGM challenged the quantum of earned income and argued that the liquidators did not properly consider whether AH-REIT had taken adequate measures to mitigate its loss.

The court found that AH-REIT had acted reasonably in its mitigation measures and that its claim is allowable.

Property Tax

PHGM also contested AH-REIT’s claim for property tax for the same time period as the rental claim citing the lack of explanation from the liquidators on how the sum of $562,409.54 was derived. PHGM asserted that it is common for property tax to be paid by tenants under commercial leases and if not, AH-REIT should explain why it was reasonable not to pass the tax on to the replacement tenant.

Between 28 August 2021 and 29 September 2022 when AH-REIT/AIMPL operated the property, the court held that PHCQ should bear the property tax by reference to Clause 3.6 of the Lease as it provided for PHCQ’s liability not to be affected by the earlier determination of the Lease.

However, the court excluded the claims amounting to $273,792.00, for the period from 1 October 2022 to 27 June 2023 when the property was leased to AHBT. The court contrasted the AHBT lease with the Lease and found that no explanation was given as to why AH-REIT did not impose the obligation to pay property tax on AHBT. The court further noted that
AH-REIT and AHBT are related parties, and the liquidators should have been alive to a potential conflict of interests by treating AHBT more favourably than PHCQ. The lack of explanation also made this conflict of interests more real than apparent.

Costs of Works

The AH-REIT POD included a claim for cost for replacement for 15 items totaling $1,555,841 (Costs of Works). In November and December 2024, PHGM requested that the liquidators verify whether the costs were for replacement and not enhancement works but the liquidators merely directed PHGM to the supporting documents in the AH-REIT POD.

PHGM disputed 12 out of 15 items on the list, asserting that the liquidators were evasive and refused to confirm whether the Costs of Works were incurred for replacement works or for enhancement to facilitate the rebranding of the property. PHGM further questioned whether the works were for defects at the time of handover that PHCQ would be liable to reinstate under the Lease or to deal with “fair wear and tear” that are expressly excluded from PHCQ’s obligations under the Lease.          

Having reviewed the evidence including quotations, invoices and other documents provided by third-party contractors, the court accepted four of the disputed items, but excluded the remaining eight items amounting to $679,454.00 on the basis that there was insufficient evidence to show that those were remedial works that fell within PHCQ’s obligations (and not to address fair wear and tear).

Notably, the court observed that it is insufficient for the liquidators to make bare assertions that they are satisfied that all items were replacement and not enhancement works, without explanation or evidence in support.

Legal Costs

The claim for legal costs comprised an expert opinion fee of $5,000 and Dentons Rodyk & Davidson LLP’s professional fees totaling $68,761.00. PHGM requested that the liquidators verify that the work done was in respect of matters relating to PHCQ. The liquidators took the position that they were satisfied but provided no explanation for the position. This formed the basis of PHGM’s challenge.

In relation to the expert opinion fee, while there was no evidence of a report being produced, the court was satisfied that there was indeed such a report based on the invoice issued to AH-REIT as it is unlikely that the invoice was issued for a nonexistent report. No challenge against the authenticity of that invoice was raised.

Opining that the legal professional fees invoices were redacted and thus unhelpful for its determination of the matter, the court directed the liquidators’ lawyers to show PHGM’s lawyers the unredacted invoices. After examining the unredacted invoices, PHGM did not further pursue the challenge, and no finding was made by the court in this regard.        

COURT’S CLOSING OBSERVATIONS & KEY TAKEAWAYS

Taking a step further beyond setting out the approach to applications under r 133(2) of the CIR Rules, this decision provided practical guidance on the expected standards of liquidators’ clarifications/explanations of its decision to admit a POD.

• When a disputing creditor seeks clarification on how the liquidators reached its decision to accept the POD, the court considers it unhelpful to merely point the disputing creditor to documents filed by the POD creditor, especially when the situation calls for an explanation. Providing helpful answers as to how the various claims were assessed and admitted may help to avoid unnecessary litigation to some extent.
• When a liquidator’s decision to admit a POD is challenged before the court, the liquidator has a duty to explain who came to the decision to admit each claim in the POD with reference to specific supporting documents and how the quantum was computed.

This decision is also a reminder of the Singapore court’s oversight of such quasi-judicial functions and that it will not hesitate to undertake a thorough examination and correction of a liquidator’s decision if necessary.