On 10 October 2019 the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, announced an upcoming inquiry into insolvency practices. The inquiry was announced in light of rising concerns as to the efficacy of the voluntary administration process for SMEs and family-owned businesses, and concerns with the conduct of insolvency practitioners more generally.

The Court of First Instance has recently helpfully summarised the legal position on schemes of arrangement under both Hong Kong law and English law. Notably, it has called for further development in cross-border coordination in order to avoid the trouble of parallel insolvency proceedings and it has raised a red flag in relation to detailed disclosure of restructuring costs: Da Yu Financial Holdings Limited [2019] HKCFI 2531.

The Ministry of Business, Innovation and Employment has published a Cabinet Paper outlining proposed reforms to New Zealand's insolvency laws to take account of certain recommendations made in the second report of the Insolvency Working Group from May 2017.

In But Ka Chon v Interactive Brokers LLC [2019] HKCA 873, the Hong Kong Court of Appeal dismissed an appeal to set aside a statutory demand arising out of online forex futures trading debts.

In Re Kaoru Takamatsu [2019] HKCFI 802, [2019] HKEC 906, the Hong Kong Court of First Instance has recognised Japanese insolvency proceedings and granted assistance to a trustee in bankruptcy appointed by the Japanese Court.

In Swiss Cosmeceutics (Asia) Ltd [2019] HKCFI 336, Mr Justice Harris of the Hong Kong Court of First Instance declined to wind up a company despite it failing to establish a bona fide defence on substantial grounds. Mr Justice Harris commented on the difficulties presented by sporadic record keeping, and reiterated the principle that the burden of proof lies with the company to demonstrate a bona fide defence on substantial grounds, despite the existence of anomalies in the petitioner’s claim.

Facts

On Friday 18 January 2019, Hong Kong and the Mainland reached a milestone by signing the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts of the Mainland and of the Hong Kong Special Administrative Region (“Arrangement“). When taken together with other similar arrangements that are in train, the Mainland Supreme People’s Court envisages that approximately 90% of judgments of a civil and commercial nature will soon be reciprocally recognised and enforced between Hong Kong and the Mainland.

In a highly international cross-border restructuring, the High Court of Hong Kong has refused to assist the New York-based Chapter 11 trustee of a Singaporean subsidiary of the Cayman-incorporated Peruvian business China Fishery Group (“CFG”).

Summary

A recent decision of the High Court of Hong Kong examined a liquidator’s powers to distribute a Hong Kong company’s assets in the PRC (being an RMB balance held in a Mainland bank account, a chose in action governed by Mainland law and subject to foreign exchange restrictions). Particularly, the Court looked at an unusual set of facts which meant there was some doubt as to whether the liquidator’s proposed distribution was in keeping with the key insolvency principles of:

1. collectivity;

On various occasions during the periods 2012 to 2018, Shane Warner Builders Limited (SWBL) regularly failed to pay GST and PAYE to the Commissioner of Inland Revenue.

In January 2018 the Commissioner filed an application to put SWBL into liquidation.  The proceeding was adjourned in March 2018 whilst the Commissioner and Applicant engaged in negotiations for relief which ultimately failed due to SWBL's history of failures to pay tax arrears and failing to provide substantive supporting evidence regarding the source of funds required to settle current tax arrears.