Executive Summary
The Appellate Division’s January 7, 2026 ruling to send the $18.9 million debt dispute involving Hour Glass co-founder Jannie Chan to trial represents more than just a procedural victory for an individual businesswoman. This case illuminates critical tensions in Singapore’s evolving corporate governance framework, particularly regarding directors’ fiduciary duties during financial distress, and arrives at a moment when the city-state is experiencing a significant uptick in insolvency cases.
The Case at a Glance
At 80 years old, Jannie Chan stands at the center of complex allegations involving her role as director of Timor Global Pte Ltd, a coffee-trading company that collapsed in 2018. The dispute centers on whether Chan breached fiduciary duties by approving substantial fund transfers totaling nearly $19 million to a related Timor-Leste entity. The three-judge panel’s decision to order a trial, rather than deciding the matter on affidavits alone, acknowledges the seriousness of the allegations and the need for rigorous examination through witness cross-examination.
Singapore’s Insolvency Climate: A Perfect Storm
The Chan case unfolds against a backdrop of mounting financial distress across Singapore. Bankruptcy filings surged 25 percent in the first half of 2024 compared to the previous year, with 2,334 individuals filing for bankruptcy. This sharp increase comes despite Singapore’s robust economic fundamentals, suggesting deeper structural pressures at play.
The rise in bankruptcies reflects the delayed impact of several converging factors. The withdrawal of pandemic-era government support, sustained high interest rates designed to combat inflation, and supply chain restructuring have exposed vulnerabilities that many businesses had temporarily masked. While Singapore’s overall debt situation remains manageable with non-performing loans below one percent for individuals and around two percent for corporates, the upward trajectory of bankruptcy applications signals growing financial strain, particularly among business owners. Slightly over two-fifths of bankruptcy orders in early 2024 stemmed from business failures.
Directors’ Duties Under Scrutiny
The Chan case arrives at a pivotal moment in the evolution of Singapore corporate law. Recent landmark decisions have brought unprecedented clarity to when and how directors must consider creditors’ interests, particularly during financial difficulty. The 2024 Court of Appeal decision in Foo Kian Beng v OP3 International established a comprehensive framework for what courts now term the “Creditor Duty.”
Under this framework, directors’ obligations shift through three distinct financial stages. When a company is financially healthy, directors may focus primarily on shareholder interests. However, when a company becomes financially parlous and imminently likely to be unable to discharge its debts, directors must carefully balance the interests of both shareholders and creditors, subjecting their decisions to heightened scrutiny. Once insolvency becomes inevitable, there is a clear shift in economic interests from shareholders to creditors as the main stakeholders, and directors are prohibited from authorizing transactions that exclusively benefit shareholders or themselves at creditors’ expense.
This duty operates as a modification of directors’ existing fiduciary obligations to the company, not as a separate duty owed directly to creditors. Consequently, creditors cannot directly sue directors for breach, though they may benefit when the company or its liquidators pursue such claims.
The Chan Case’s Particular Significance
Several aspects of the Chan case make it particularly instructive for Singapore’s corporate governance landscape.
First, the case highlights the critical importance of documentary evidence and internal controls. The judges noted substantial discrepancies between management accounts and audited financial statements, with receivables from the Timor-Leste entity showing a $9.8 million difference. Such inconsistencies raise fundamental questions about corporate record-keeping practices and the reliability of financial information upon which directors base their decisions.
Second, the case illustrates the challenge of “passive” or “nominee” directors. Chan claimed to be merely a financial investor with no hands-on involvement in operations, despite being sole shareholder and director. Yet she simultaneously admitted in earlier proceedings that the company had lent money to the related entity. This contradiction exemplifies a common problem in Singapore corporate structures where directors attempt to distance themselves from operational decisions while maintaining formal control. Recent case law has made clear that even passive or nominee directors cannot completely abdicate their responsibilities. They must acquire and maintain sufficient knowledge to discharge their duties adequately, including making inquiries about transactions that might disadvantage the company or its creditors.
Third, the timing and characterization of the $15.8 million in fund transfers presents complex questions about corporate relationships and conduit arrangements. The judges observed that these payments roughly coincided with advance payments meant for the Timor-Leste entity under a joint venture agreement, suggesting the funds may have merely passed through the Singapore company. If proven, this would negate any breach of duty since the company would have been acting as a conduit rather than making improper loans. This highlights the importance of clearly documenting the purpose and authorization of inter-company transactions, particularly in joint venture or related-party contexts.
Impact on The Hour Glass and Singapore’s Luxury Retail Sector
While Chan’s bankruptcy stems from her coffee-trading ventures rather than her role at The Hour Glass, the case carries reputational implications for the luxury watch retailer she co-founded with her husband Henry Tay in 1979. The Hour Glass has grown into a regional powerhouse with over 55 boutiques across 12 cities in the Asia-Pacific region, representing prestigious brands including Rolex, Patek Philippe, and MB&F. The company reported revenue exceeding $1 billion in its 2023 financial year, with profit after tax reaching $174 million.
The luxury watch sector in Singapore occupies a unique position in the broader economy. Singapore consistently ranks among the top ten export markets for Swiss watches globally, reflecting deep-seated cultural appreciation for fine craftsmanship and a strong base of informed collectors. The Hour Glass and other major retailers like Cortina and Sincere have been instrumental in developing this market sophistication.
However, the sector faces its own challenges. Economic headwinds, fluctuations in tourism spending, and changing consumer preferences have created volatility in luxury retail. The Hour Glass has responded by expanding beyond traditional Orchard Road locations, implementing flexible payment programs, and hosting exclusive events like the IAMWATCH gathering that brings together independent watchmakers and collectors.
Chan’s personal legal troubles are unlikely to significantly impact The Hour Glass’s operations, given that her active involvement ceased years ago and the company maintains separate management and governance structures. Nevertheless, the case serves as a reminder that even successful businesses can be affected by the personal financial decisions of their founders.
Broader Implications for Corporate Governance
The decision to send the Chan case to trial rather than deciding it summarily sends important signals to Singapore’s business community.
First, courts will not make dispositive findings on serious allegations of breach of fiduciary duty without thorough examination of evidence and witness testimony. This protects directors from potentially career-ending determinations made solely on documentary records, but also means that questionable conduct will face rigorous scrutiny.
Second, the case reinforces that directors cannot hide behind claims of limited involvement or reliance on co-directors when significant transactions occur. The corporate governance framework expects directors to stay informed about material developments affecting the company, particularly financial distress and large fund movements.
Third, the case highlights the importance of clear documentation and consistent accounting practices. The discrepancies between different financial records became a central issue precisely because they made it impossible to determine the true nature of the transactions without live testimony.
Fourth, for companies operating across borders or in joint venture arrangements, the case underscores the need for meticulous documentation of the purpose and authorization of inter-company transfers. What might be characterized as improper loans could potentially be legitimate conduit arrangements, but only if properly documented.
The Evolving Legal Landscape
Singapore has been at the forefront of developing sophisticated frameworks for corporate insolvency and restructuring. The 2020 Insolvency, Restructuring and Debt Restructuring Act introduced comprehensive reforms, and courts have continued to refine the application of directors’ duties through case law.
The trend is toward greater accountability for directors while maintaining flexibility for legitimate business judgment. Courts recognize that directors facing financial difficulty need latitude to attempt turnaround strategies that might benefit both creditors and shareholders. However, this flexibility diminishes as insolvency becomes more certain, and directors who engage in transactions that primarily benefit themselves or shareholders at creditors’ expense face serious consequences.
For Singapore’s business community, particularly in sectors experiencing financial pressure, these developments create both challenges and opportunities. Directors must be more vigilant about their companies’ financial health, more careful in documenting significant transactions, and more thoughtful about their duties as financial circumstances deteriorate. However, those who act in good faith with proper regard for all stakeholders can navigate financial difficulty without personal liability.
Practical Takeaways for Directors and Companies
The Chan case, viewed alongside recent developments in Singapore corporate law, suggests several practical implications.
Directors should implement robust monitoring systems to track company financial health in real time. The three-stage framework for creditor duties makes early identification of financial distress critical. Companies should ensure consistency between management accounts and audited financial statements, with procedures to investigate and explain any material discrepancies. Directors should be particularly careful about related-party transactions, ensuring these are properly documented, fairly priced, and authorized through appropriate governance processes.
For companies in financial difficulty, directors should document their consideration of creditors’ interests in board minutes and ensure any restructuring or significant transaction decisions reflect good faith efforts to maximize overall value rather than simply benefit shareholders. Directors who are nominally passive should either take active steps to stay informed or consider resigning, as the “passive director” defense has become increasingly difficult to sustain.
Companies should review and strengthen internal controls around fund transfers, particularly those involving related entities or crossing borders. Legal and financial advisors should be consulted early when financial difficulties emerge, before the company reaches the point where insolvency becomes inevitable.
Conclusion
Jannie Chan’s journey from celebrated business pioneer to embattled bankrupt serves as a cautionary tale about the complexities of corporate governance and the enduring importance of fiduciary duties. Her case arrives at a moment of heightened financial pressure across Singapore’s economy and evolving legal standards for director accountability.
The decision to send this $18.9 million dispute to trial rather than resolving it on paper acknowledges both the seriousness of the allegations and the complexity of the factual questions involved. Regardless of the ultimate outcome, the case has already contributed to Singapore’s ongoing refinement of corporate governance standards, particularly regarding how directors should navigate the challenging waters of financial distress.
For Singapore’s business community, the message is clear: directorship carries real responsibilities that cannot be delegated away or ignored. As the legal framework continues to evolve toward greater accountability, directors must be proactive, informed, and diligent in discharging their duties, particularly when companies face financial challenges. The cost of failure, as Chan’s case demonstrates, can extend far beyond business losses to encompass personal financial ruin and reputational damage.
In an environment where bankruptcy filings are rising and scrutiny of corporate conduct is intensifying, the Chan case serves as both warning and guide for how directors should approach their responsibilities in Singapore’s increasingly sophisticated corporate governance landscape.