Introduction 

On 12 November 2020, the Official Receiver's Office ("ORO") issued Circular No. 2 / 2020 setting out the revised arrangement on submission of Form D1 and Form D2 by provisional liquidators or liquidators to the Official Receiver ("Circular"). Provisional liquidators / liquidators ("Liquidators") are required to submit a statutory Form D1 to the ORO when they become aware of any unfit conduct of a director. The Circular takes effect from 1 December 2020.

Hong Kong's insolvency system is famous for its lack of statutory corporate rescue procedure ("CRP"). Owing to the lack of CRP, financially distressed companies may only recourse to rescue their business with (i) a non-statutory consensual agreement with major creditors to restructure debts, or (ii) a scheme of arrangement under the Companies Ordinance (Cap. 622). These options, however, have many problems such as being expensive, impracticable, inflexible and tedious.

The Supreme Court has recently released a decision on directors' duties, which should serve as a timely reminder to all directors of their duties under the Companies Act in circumstances of insolvency. Continuing to trade while insolvent will be a breach of your duties, even if you believe that overall creditors may be better off or the extent of losses will be reduced. It is however welcome confirmation for liquidators that the Courts will enforce the provisions of the Companies Act based on the clear wording of these sections.

Introduction

The COVID-19 crisis has imposed difficult global challenges on the retail industry. Mass closures of brick and mortar store fronts and supply chain disruptions have resulted in an unprecedented halt to business activities. Nevertheless, there are some steps retailers can take to better protect their business interests.

Given the material impact that coronavirus is having on businesses, on March 28, 2020 the government announced that legislation would be forthcoming amending UK insolvency laws to: