How the recent changes will impact restructurings of listed companies

Less than an hour after an oxygen tank exploded on Apollo 13, mission control told the crew to isolate a small tank, containing 3.9 pounds of oxygen.^[1] Days later, that tank provided the oxygen to keep the crew alive while landing back on Earth.

If they had left that tank for even another hour the oxygen in it would have been almost gone.

The appointment of a receiver by way of equitable execution has generally been considered a “remedy of last resort”[1] and, for over a hundred years, courts have expressed differing views as to when they could appoint such a receiver.

Re Kaoru Takamatsu – [2019] HKCFI 802 (date of judgment 25 March 2019)

For the first time the Hong Kong Court has recognised a Japanese winding up proceeding and granted assistance to a bankruptcy trustee appointed by the Japanese Court.

Background

On 1 March 2018, the District Court of Tokyo, Twentieth Civil Division (“Tokyo Court”) ordered Japan Life Co, Ltd (“Japan Life”) to be wound up and appointed Mr Kaoru Takamatsu as trustee in bankruptcy.

有关Kaoru Takamatsu – [2019] HKCFI 802一案 (判决日期2019年3月25日)

香港法庭首次认可日本清盘程序，并向日本法庭委任的破产管理人提供援助。

背景介绍

于2018年3月1日，东京地区裁判法院民事诉讼第20支部向Japan Life Co, Ltd (以下简称“Japan Life”) 颁发清盘令，并委任Kaoru Takamatsu先生为破产管理人。

Takamatsu先生需要获取Japan Life在瑞穗银行及汇丰银行的香港分行所持有的银行账户记录。于是，Takamatsu先生寻求香港法庭的认可和援助，以获得该账户的记录，并处理Japan Life在香港的相关事务。

判定和原则

The Land and Conveyancing Law Reform (Amendment) Bill 2019 (the “Bill”) proposes to broaden the factors that the courts can consider in refusing orders for possession sought by lenders.

The Bill has its roots in the Keeping People in their Homes Bill, 2018, introduced by Kevin “Boxer” Moran T.D., as a private member’s bill. However, the Bill does not go as far as Mr Moran’s bill and, for instance, does not require disclosure of the price paid by a purchaser of the loan.

Background

Overall 2018 has produced a number of positive judgments from the perspective of lenders and insolvency practitioners.

In particular, the courts delivered many useful judgments disposing of numerous challenges to the enforceability of loans and security and, also, restricting abuse of the courts’ processes.

Contemptuous McKenzie Friends

The Court of Appeal has helpfully confirmed that a judgment creditor can seek an order appointing a receiver by way of equitable execution where:

• the debtor holds a legal or equitable interest in property; and
• execution against the property is not available at law by one of the usual methods, for instance via the sheriff or by a garnishee order.

There was previously doubt as to whether such a receiver could be appointed where the debtor held a legal, as opposed to an equitable interest, in property.

The High Court has recently expressed concern that distressed borrowers are being duped into paying money to the anonymous promoters of schemes, which purport to protect them from enforcement by lenders but are actually ‘utterly misguided and spurious’.

There are a number of schemes being promoted at the moment that supposedly protect borrowers in arrears from enforcement by their lender.

Simple retention of title clauses are commonplace and generally effective in contracts for the sale of goods. However, extending their effect to the proceeds of sale of such goods requires careful drafting.

The Court of Appeal has provided some further clarity around the creation and effects of fiduciary obligations in relation to such clauses.[1]

Proceeds of sale clauses