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Singapore Court of Appeal Clarifies Test for Determining Company’s Inability to Pay Debts and Right to Appeal Winding Up

Submitted by Firm:
WongPartnership
Firm Contacts:
Jenny Tsin, Vivien Yui
Article Type:
Legal Update
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In Sun Electric Power Pte Ltd v RCMA Asia Pte Ltd (formerly known as Tong Teik Pte Ltd) [2021] SGCA 60, the Singapore Court of Appeal held that:

(a) The cash flow test is the sole test under section 254(2)(c) of the Companies Act (re-enacted as section 125(2)(c) of the Insolvency, Restructuring and Dissolution Act (“IRDA”)); and

(b) A company has the right to appeal a winding up order regardless of whether a stay order is granted, and its directors can control the conduct of the appeal.

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