Experienced insolvency practitioners in Hong Kong are all familiar with Hong Kong Court of Appeal's decision of 1 March 2006 in the liquidation of Legend International Resorts Limited1.
In Beijing Tong Gang Da Sheng Trade Co., Ltd (as assignee of Greater Beijing Region Expressways Limited) v Allen & Overy & Anor, FACV 2, 3, 4 and 5 of 2016, the Court of Final Appeal held that the addition or substitution of a party to an action amounts to a “new claim”, as defined in section 35(2) of the Limitation Ordinance (Cap 347)) and would not therefore be permitted after the relevant limitation period had expired, unless it came within the rules of court as required under Section 35(3) and (5) of the Limitation Ordinance (Cap 347).
The Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 (CAP 32) (the “Amendment Ordinance”) came into force on 13 February 2017. One of the key objectives of the Amendment Ordinance is to increase protection of creditors. Under the Amendment Ordinance, liquidators are given the avoidance power to set aside transactions at an undervalue and unfair preferences.
Rian Matthews and Kate Ballantine-Dykes from Baker McKenzie have published an article entitled “Common law to the rescue: bridging gaps in international and domestic restructuring and insolvency regimes” in Corporate Rescue and Insolvency.
By now, you will all be aware of the recently gazetted the Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 ("Amendment Ordinance"), heralding as it does a much anticipated refreshment and modernisation of the Companies (Winding Up and Miscellaneous Provisions) Ordinance ("CWUMPO") and the Companies (Winding up) Rules ("CWUR").
Given that the last major amendments to the corporate winding-up regime in Hong Kong occurred in 1984, reform in this area is long overdue.
Whether it’s the kids’ day-care, the family holiday, or that gym membership we eagerly signed up for on the first of January, paying for goods and services before receiving them is the normal practice in many business sectors. It’s also the usual way to buy things off the internet. It’s become so common that we rarely ask what would happen if the business fails to deliver. Fortunately, in Hong Kong this is a question that does not have to be asked often, but as the economic environment gets tougher it may be one that deserves greater attention.
A key factor contributing to the vitality and development of the common law is that judges can have the benefit of authorities from other jurisdictions with a comparable legal framework. This has proved and will be increasingly important in areas such as cross-border insolvency, where modified universalism has been thecatchword in recent years.
The Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 (Amendment Ordinance), gazetted on 3 June 2016, will come into effect on a date to be appointed by the Secretary for Financial Services and the Treasury. It amends the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32. This article is the first in a series, highlighting the major changes to be introduced.
Aims of Amendment Ordinance
The Amendment Ordinance aims to: