Ng Yu Zhi’s bankruptcy estate to admit investor’s S$12 million debt claim: High Court
Judge finds trustees did not substantially dispute her claim, and they have overstated the degree of complexity involved
[SINGAPORE] The bankruptcy estate of alleged nickel fraudster Ng Yu Zhi will have to take in the proof of debt for S$12 million from investor Veronica Shim after the High Court on Tuesday (May 13) reversed the trustees’ decision that rejected her claim.
Ng is accused of masterminding a nickel-trading scam through his companies that attracted nearly S$1.5 billion from 947 investors including Shim over six years, and allegedly used the invested funds to finance his lavish lifestyle.
Ng is standing trial for 42 charges of fraudulent trading, cheating, forgery, criminal breach of trust and money laundering in a criminal proceeding, with Shim and her company Envysion Wealth Management being named as victims in two cheating charges.
Shim has separately made claims against both Ng and his companies to recover her loss.
However, the two trustees of Ng’s bankruptcy estate had rejected Shim’s claim because they argued that she should not claim against the 38-year-old but against Ng’s Envy group of companies that were said to have perpetrated the scheme.
Contending that her claim is already included in the claim against the Envy companies brought by the liquidators for the companies on behalf of the defrauded investors, accepting hers in Ng’s bankruptcy estate would increase time and costs in determining the claims in the bankruptcy estate.
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The Envy liquidators have earlier brought their own claims against Ng over the same purported investment scams and obtained summary judgment against him, resulting in Ng being declared bankrupt on Dec 22, 2022. The estate trustees have taken in those claims from the liquidators.
However, the judge found that Shim’s claim against Ng’s estate should not be rejected simply on the grounds of factual or legal complexity, because the trustees did not substantially dispute her claim, and they have overstated the degree of complexity involved.
The trustees also submitted that none of the defrauded investors should be allowed to recover from both Ng’s estate and the liquidation of the Envy companies, as that would allow them to steal a march on the other defrauded investors and profit at their expense.
Investors who could not frame claims against Ng directly because they never dealt with him directly would be disadvantaged and recover a smaller share, contended the trustees.
Instead, the Envy liquidators should recover the sums from Ng, and then distribute his assets to all defrauded investors. Otherwise, the costs of administering claims at both the levels of Ng’s estate and the Envy companies’ liquidation would reduce the distributable pool of assets and delay the administration of both, argued the trustees.
However, there is no legal basis for the trustees to reject a proof of debt to ensure an orderly administration, Shim’s lawyer Wendy Lin said, and the costs of the liquidation of the Envy companies are not a concern of the trustees.
Justice Philip Jeyaretnam pointed out in his written decision that the added costs and complexity of coordination between the administrators of the two estates have no legal basis to limit the creditor who has claims against both estates to proof only against one of them.
“While it may be more convenient, as a practical matter, to consolidate the distribution of dividends, that does not provide a legal basis for rejecting the applicant’s (proof of debt). Ultimately, it remains the private trustee’s duty to ensure that the assets in the bankruptcy estate are distributed to creditors who have debts that have been genuinely created and remain legally due.”
Commenting about the concern of the trustees that Shim could have double recovery, the judge pointed out that the proof of debt could be admitted first with the actual amounts to be paid out adjusted later when distributing the assets.
Justice Jeyaretnam also emphasised that he is only directing the admission of Shim’s claim but not on how the dividend process should be carried out.
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