Opposition politician and lawyer Lim Tean, who owes US$150,000 ($203,000) to a Shanghai businessman, submitted two cheques on Wednesday to settle the debt ahead of a bankruptcy hearing scheduled for yesterday.
The bankruptcy hearing has now been adjourned for two weeks and if the cheques clear, Mr Lim will avoid bankruptcy.
Bankruptcy could cast doubts on whether Mr Lim is able to contest in the next general election, due by April 2021. Undischarged bankrupts are not eligible to stand for election.
The proceedings arise from a civil suit that Mr Huang Min filed in 2017 against Mr Lim over a disputed loan of US$150,000. Mr Huang produced a copy of the loan agreement, signed by both men in September 2013, in which he was identified as "lender" and Mr Lim as "borrower".
The repayment deadline was stated as Nov 30 that year, but no payment was made, said Mr Huang.
He also produced an e-mail from Mr Lim in February 2017, in which the defendant assured Mr Huang that the loan would be repaid.
Mr Lim, in his defence, argued that the loan agreement was a sham, and that the sum was actually a down payment for the sale of iron ore to Mr Huang's company in Hong Kong. He said he controlled an iron ore mine in Indonesia and had agreed to sell iron ore to Mr Huang. He said Mr Huang wanted the down payment for the first cargo to be classified as a loan for his own internal purposes.
Mr Huang, who is represented by Providence Law Asia's Lim Mingguan, won a summary judgment before a deputy registrar in the State Courts.
On appeal, the decision was affirmed by a district judge and Mr Lim was ordered to repay the loan.
Mr Huang filed a bankruptcy application against Mr Lim when the sum remained unpaid even after a statutory demand had been issued.
Mr Lim appealed to the High Court against the lower court's decision, but withdrew the appeal on Tuesday.
Mr Lim was secretary-general of the National Solidarity Party (NSP) between 2015 and 2017 before founding People's Voice, which is Singapore's 11th political party.