Creditors, Trust and Insolvency

• Main Author: TANG, Hang Wu
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: Commercial Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/1419; http://dx.doi.org/10.1093/tandt/ttu021
• Institution: Singapore Management University

This article considers the rights of creditors who enter into contracts with trustees in the context of insolvency. The insolvency aspect may arise when either the trustee or beneficiary is insolvent. In these circumstances, if the trust property is not sufficient to meet all of the third parties’ claims and the claims from the beneficiary’s creditors, how do we deal with the question of priority of claims? In short, are the creditors of the trust entitled to assert an interest over the trust assets? This issue becomes even more complicated when the trustee is a corporate entity. Do the trust creditors need to file for the insolvency of the trust company before they may be able to assert any kind of interest over the trust assets? The author considers these difficult questions in the context of the recent Singapore decision of EC Investment Holding Pte Ltd v Ridout Residence Pte Ltd.