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 13 September 2018, the UK Government published a guidance notice (Guidance) on handling civil disputes, including cross-border insolvencies, in the event that the UK exits the EU without having first agreed a framework for ongoing civil judicial cooperation, and from which time and date (11 pm on 29 March 2019) the UK will not benefit from the EU rules to replace the current arrangements.

The High Court has considered a recent Court of Appeal ruling on whether trustees in bankruptcy should be able to deploy privileged documents in the discharge of their duties.

The existing position under Avonwick

The facts of Shlosberg v Avonwick Holdings Limited [2016] EWCA Civ 1138 involved a company called Webinvest. Webinvest was beneficially owned by Mr Shlosberg. Avonwick lent US$100 million to Webinvest, with Mr Shlosberg personally guaranteeing the loan.

The English Supreme Court has considered various new categories of creditor claims against a company with unlimited liability in administration where, unusually, there was enough money to pay all creditors and a surplus existed.

In proceedings commonly referred to as the Waterfall I litigation, the Supreme Court considered issues relating to the distribution of funds from the estate of Lehman Brothers International Europe (in administration) (LBIE), in circumstances where there was a surplus of assets amounting to approximately £8 billion.

At first glance, it seems that cross-border insolvencies between the UK and EU are likely to become more time-consuming, complex and expensive post-Brexit. However, the situation may not be as dire as it first appears due to the existence of alternative legislation and the exemptions to the EU legislation. As with other areas of law, when it comes to insolvencies much will depend on what steps are taken to maintain the current arrangements with the EU or whether they fall away altogether.

At first glance, it seems that cross-border insolvencies between the UK and EU are likely to become more time-consuming, complex and expensive post-Brexit. However, the situation may not be as dire as it first appears due to the existence of alternative legislation and the exemptions to the EU legislation. As with other areas of law, when it comes to insolvencies much will depend on what steps are taken to maintain the current arrangements with the EU or whether they fall away altogether.

In the recent judgment of Gorbunova v The Estate of Boris Berezovsky (deceased) and others¹ the High Court has provided useful guidance as to when summary judgment is appropriate in deciding whether a trust was established.

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.

In Erceg v Erceg¹ the New Zealand Court of Appeal ruled on the standing of bankrupt beneficiaries to bring claims against trustees. In addition, the Court considered the role of trustee discretion when determining beneficiary access to trust documentation. The decision is useful for trustees and beneficiaries alike, and provides clarity on the steps a Court may take when deciding whether or not to grant beneficiaries disclosure of trust information. Although this is a New Zealand decision, other common law courts such as Hong Kong may reach similar conclusions.

In Re Hin-Pro International Logistics Limited[1], the Hong Kong Court of First Instance held that it has jurisdiction to grant leave to amend a creditor's winding up petition to include debts accrued only after its presentation.