Grant Of Security – Not So Secure Anymore?

Summary

The recent High Court decision in Encus International Pte Ltd (in compulsory liquidation) v Tenacious Investment Pte Ltd & Ors [2016] SGHC 50 (Encus International) bears significance to lenders for two pivotal reasons. First, it reiterates the orthodox position that an appropriately-crafted entire agreement clause could cause a previously-negotiated agreement, including a prior term sheet, to be superseded. Secondly, it casts a long shadow of doubt on the status of grant of security in Singapore's insolvency regime. While the traditional English position holds that the grant of security is beyond the reach of avoidance under the Bankruptcy Act, the court in Encus International has significantly opined that this may no longer be the case in Singapore.