WHEN SILENCE ISN'T GOLDEN

What to do when your proof of debt is rejected years later.

THE CASE

Imagine submitting a claim for over USD 1 million during the liquidation of a company, only to receive a rejection more than five years later. For many creditors, this scenario is more than frustrating – and in most cases, it is potentially devastating. The question is, can a rejection be challenged after such a long silence?

This was exactly the situation faced by one of our clients, who had submitted a proof of debt for over USD 1 million in a company’s liquidation. For years, there were minimal to no follow-up request for clarification, and certainly no decision. Five years later, from the date that our client first filed his proof of debt, the liquidator had informed our client that his proof of debt had been rejected in whole.

Our client reached out to us, and we acted swiftly by filing an application to challenge the rejection. Our application was for the Honourable Court to reverse the liquidator’s decision or vary the proof of debt to an amount that the Honourable Court deemed appropriate. We worked with our client, trawled through records and provided the Honourable Court with our client’s version of events. The Court ultimately agreed with our position, ordering that our client be awarded the full sum claimed, along with costs in our client’s favour.

THE COMPLEXITIES BEHIND THIS CASE

This was not a straightforward case.
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Informal Loans  – The debt in question arose from multiple loans made over several years -- some directly to the company, others to its director, and some even facilitated through friends, family members, or our client’s own corporate account. Trust played a major role in how the loans were disbursed and as such, there were no loan agreements in place. In many cases, especially involving friends or close associates, loans are extended without formal documentation. This does not invalidate the claim. In our client’s case, the Honourable Court accepted our client’s alternative evidence, such as:

• Company emails acknowledging the debt;
• Audited accounts listing the amounts owed;
• Statements made by the Company to third parties, confirming the debt.

Time – Apart from the issue of locus standi – whether our client was the correct person to bring the claim, given the involvement of third parties and informal arrangements, the unexplained delay of several years affected the ability of our client, as a creditor, to prove his claim. This included:

• Difficulty retrieving bank records from years past;
• Loss of primary documents or relevant communications;
• Witnesses becoming untraceable or forgetful; and/or
• Evidentiary gaps which may become irreversible over time.​

​​WHAT CAN YOU DO?

Keep meticulous records –This case underscores a crucial point for anyone lending money to keep meticulous records. Better 
records could have simplified our client’s situation. 
To protect yourself:

• Use Agreements: Where possible, use written loan agreements detailing terms, parties, amounts, interest, and purpose.

 

• Keep Correspondence: If having an agreement at 
  the time of the loan was not possible, a simple 
  correspondence, via text message or email, may prove to be crucial. Be sure to save all relevant emails, letters, and notes.
  
  
• Track Transfers: Record dates, amounts, bank 
  accounts, and the precise purpose of all money 
  transfers.

Good records are invaluable if you need to prove a debt, 
especially in an insolvency.

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​HOW CAN WE HELP?

Filing your proof of debt – If you are in a situation where you require legal assistance to file your proof of debt, we are able to work through your documents / information with you to best present the proof of debt.

Appealing your proof of debt rejection – Do not worry, a rejection of your proof of debt is not final. The IRDA allows creditors to make an appeal to the Court if your proof of debt is rejected, BUT you must act quickly. Under the IRDA, creditors have just 21 days from the date of the notice of rejection to apply to the Court to vary the liquidator’s decision.

We understand the frustration and complexity of having to go through records to file your proof of debt and/or to have your proof of debt rejected. Contact us today to find out how we can help protect your interest!

Sindhu Nair
Senior Associate
T: +65 6730 6048
E: [email protected]

​Lim Chu Yech
Senior Associate
T: +65 6730 6035
E: [email protected]

This article was written by our Senior Associates, Ms Sindhu Nair and Ms Lim Chu Yech, and illustrations were contributed by our brilliant and talented intern, Mr Ang Ying Le. [12 June 2025]

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DISCLAIMER: This article and the contents herein are for general information only and should not be treated or substituted as legal advice. Please consult a qualified legal professional for your specific situation. The contents of this article are owned by Tito Isaac & Co LLP and should not be sold, published, modified without written permission from Tito Isaac & Co LLP. Tito Isaac & Co LLP does not accept and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this article.