In Hong Kong, the Official Receiver, a provisional liquidator, liquidator or any creditor may apply for a regulating order any time after the presentation of a winding-up petition. Because the court has the power to dispense with various winding-up procedures on making a regulating order (for example, the calling of the first meeting of creditors and contributories), this has sometimes been viewed as a way to facilitate a more streamlined liquidation process.

In Hung Yip (HK) Engineering Company Limited v. Kinli Civil Engineering Limited [2021] HKCFI 153, the Honourable Mr Justice Harris reiterated the test governing when the court will restrain the presentation of a winding-up petition. This is a timely reminder amidst the COVID-19 crisis, which has sparked disputes between companies and their creditors.

The COVID-19 pandemic has affected businesses all over the world. Whilst directors will actually consider that their primary responsibility is to keep the business running during difficult times, it is equally important to bear in mind that this should be done in accordance with the law and via appropriate means. A director should always have regard to the company's financial status and avoid entering into transactions that are in breach of his/her fiduciary duties as director, especially when the company's solvency is open to question.

“As is well known, other than schemes of arrangement, Hong Kong has no legislation that provides for corporate debt restructuring or rehabilitation. This unsatisfactory state of affairs has been the subject of much invariably adverse comment for two decades now. It is brought into unforgiving focus by the economic problems that Covid-19 is causing.

China Huiyuan Juice Group Ltd (the “Company”) is a company incorporated in the Cayman Islands and listed on the Hong Kong exchange. Almost 100% of the group’s revenue is generated by its Mainland subsidiaries, from the manufacture and sale of fruit and vegetable concentrate, purée and juice beverages in the Mainland.