Historically, the common law has only recognised foreign insolvency proceedings commenced in the jurisdiction in which the company is incorporated. This may no longer be the case in Hong Kong. Going forward, a Hong Kong court will now recognise foreign insolvency proceedings in the jurisdiction of the company’s “centre of main interests” (COMI). Indeed, it will not be sufficient, nor will it be necessary, that the foreign insolvency process is conducted in a company’s place of incorporation.

On 6 June 2022, Mr Justice Harris sanctioned a Hong Kong scheme of arrangement for Rare Earth Magnesium Technology Group (the Company) in re Rare Earth Magnesium Technology Limited [2022] HKFCI 1686 (Rare Earth).

In the matter of Squirrel Limited (In Liquidation), the Court considered an application for summary judgement against a director for insolvent trading. In doing so, the Court considered the principles underpinning a director’s duty to prevent insolvent trading and the compensation payable as a result.

Background

In Re Intellicomms Pty Ltd (in liq) [2022] VSC 228, it was determined that a sale agreement was a creditor-defeating disposition within the meaning of section 588FDB of the Corporations Act 2001 (Cth) (Act) and voidable pursuant to section 588FE(6B) of the Act.

Family law processes cannot be used to defraud creditors. In Re ZH International Pty Ltd (in liq), the Supreme Court of New South Wales held that transfers of property from a company to the directors and shareholders of that company as part of family law proceedings were voidable transactions under section 588FF of the Corporations Act 2001 (Cth) where the company was not a party to the orders and the orders did not require the company to make the transfers.

Background

We previously wrote about the Court’s attitude to liquidators’ applications for directions on matters arising in a compulsory winding up (i.e., by the court) under section 200 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap.

In Algeri, in the matter of WBHO Australia Pty Ltd (Administrators Appointed) [2022] FCA 169, the Federal Court heard the second application by the administrators who were seeking an extension to the convening period for the second meeting of creditors, which pursuant to section 439A(5) of the Corporations Act 2001 (Cth) (the Act) was set to expire on 24 March 2022.

In Re Grand Peace Group Holdings Limited [2021] HKCFI 2361, the Hong Kong Court refused to exercise its discretionary jurisdiction to wind up an offshore holding company due to difficulties in the recognition of Hong Kong liquidators in the BVI.

Background

InAustralian Securities and Investments Commission v Marco (no 9) [2021] FCA 1306 the Administrators brought an interlocutory application seeking remuneration orders pursuant to section 60-10(1)(c) of the Insolvency Practice Schedule (IPSC) for the administration of the second defendant. The application was opposed by the Liquidators of the second defendant.

As discussed in our previous blog post, the decision for provisional liquidators to apply for directions on the distribution of funds can be a difficult one to make.