Set-off, netting and avoidance

Set-off

Insolvency set-off applies in Singapore liquidations through the IRDA's incorporation of the bankruptcy rules on mutual credits and mutual dealings. Where a customer owes the platform under a margin loan and the platform owes the customer the balance of her account, the two are set off and only the balance is provable or payable.¹ Set-off operates only between claims of the same character. A customer's proprietary claim to trust assets cannot be set off against her debt to the platform, because trust assets are not the platform's and the mutuality requirement fails. This cuts both ways. A customer who is a beneficiary recovers her assets in full but must pay her debts in full. A customer who is a creditor nets.

Avoidance of pre-insolvency transactions

Customers who withdrew assets shortly before a platform's failure face the risk of avoidance claims. A liquidator may challenge transactions at an undervalue within three years before the commencement and unfair preferences within six months, or two years for associates, where the company was insolvent at the time or became so as a result.² A withdrawal of a customer's own trust assets is no preference. The assets were never the company's. A repayment of a loan to a customer-lender is a preference if the company was influenced by a desire to prefer that customer, which is rarely provable for ordinary withdrawals processed in the normal course. Withdrawals by insiders and by large creditors who received special treatment after the company knew it was insolvent are the realistic targets. The Celsius clawback litigation in the United States gives a sense of the scale, but Singapore liquidators have so far pursued such claims sparingly in crypto cases.

Notes

Insolvency, Restructuring and Dissolution Act 2018, provisions applying the bankruptcy rules on mutual credits, mutual debts and other mutual dealings to the winding up of companies. ↩
Insolvency, Restructuring and Dissolution Act 2018, ss 224 (transactions at an undervalue) and 225 (unfair preferences), with the time limits in s 226. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.

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Dr Alexander Ressos, TEP

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I am Of Counsel with KGP Legal LLC in Singapore, where I work with a global client base of successful entrepreneurs and their families, independent asset managers, commodity trading houses and other commercial clients. I am a German and Swiss attorney-at-law, also admitted as a solicitor in England & Wales and in Hong Kong. I divide my time between Zug in Switzerland, Singapore and Hong Kong. Since 2017 I have advised international clients on more than 700 crypto and digital asset projects. I also have extensive experience in cross-border litigation and arbitration in Singapore, Hong Kong and other markets in South-East Asia and Greater China.

I operate across the key financial centres in South-East Asia, the Middle East and Switzerland, with a particular focus on asset protection, international tax and estate planning, as well as trusts, company administration and other fiduciary services. My philosophy is to serve as a trusted advisor working closely with my clients and to help them achieve their commercial objectives.

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