Land and buildings Ships and aircraft Other tangible assets Liens Retention of title Intangible assets Personal security Debentures Form of debentures Assets covered by debentures Trust receipts or letters of hypothecation
Receivership
Appointment of a receiver Receivers' powers Receivers' obligations Termination of the receivership
Deacons contacts
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Types of security
While every effort has been made to ensure the accuracy of the information contained in this booklet, it is only a summary and should not be relied upon as a substitute for detailed advice in individual cases.
Deacons 2020
Contents
Introduction Corporate insolvency
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Available procedures
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Liquidation
2
Members' voluntary liquidation
2
Creditors' voluntary liquidation
3
Compulsory liquidation
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Which procedure?
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Receivership
3
Scheme of arrangement3
In recent years the Hong Kong Companies Court has dealt with a large number of applications for recognition and assistance from the Courts of various overseas jurisdictions in relation to cross border insolvency matters. The Court will now routinely grant orders of recognition and assistance to liquidators of companies incorporated in Commonwealth jurisdictions such as the Cayman Islands, Bermuda and the British Virgin Islands, which are all common law jurisdictions which have insolvency law regimes which are in many ways similar to Hong Kong’s own regime.
Executive Summary
In any bankruptcy, there are inevitably winners and losers. The winners do not always do virtuous acts to win and the losers are not necessarily evil. Rather, dividing up a limited pie, the bankruptcy courts must leave some creditors short-changed. A good example is the recent 7th Circuit case involving a supplier and a lender. (hhgregg, Inc. et al. (Debtor). Whirlpool Corporation v. Wells Fargo Bank, National Association, and GACP Finance Co., LLC, 7th Circuit Court of Appeals, No. 18-3363, February 11, 2020) |
Secured creditors filing a UCC financing statement under Article 9 must include a description of the collateral. (UCC 9-502) UCC Article 9 adopts a “notice filing” system, under which the purpose of the filing is to provide notice of a security interest in the specified collateral. UCC Article 9 does not require a precise (e.g., serial number) description. Even so, there has been much litigation over the sufficiency of the collateral descriptions in UCC financing statements.
In Re Southwest Pacific Bauxite (HK) Ltd [2018] 2 HKLRD 449, the Honourable Mr Justice Harris held that a petition to wind up a company on the ground of insolvency should “generally be dismissed” where:
(a) | a company disputes the debt relied on by the petitioner; |
(b) | the contract under which the debt is alleged to arise contains an arbitration clause that governs any dispute relating to the debt; and |
(c) |
In recent years, the Hong Kong courts have been required to deal with a significant number of cases concerning cross border insolvency. Most notably, a number of cases have arisen where insolvency practitioners appointed by overseas courts seek recognition of their authority to act on behalf of overseas companies placed in liquidation or a similar insolvency regime, and to seek authority to use powers equivalent to those granted to liquidators by the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.
On May 20, 2019, the U.S. Supreme Court issued its long-awaited decision in Mission Products Holdings, Inc. v. Tempnology, LLC nka Old Cold LLC, (Case No. 17-1657, U.S. Supreme Court, May 20, 2019) ("Tempnology"). The U.S. Supreme Court decided that a trademark licensee can continue to use a trademark license even when a bankrupt trademark licensor rejects the license agreement.
In Re Kin Ming Toy Manufactory Ltd (in liquidation), HCCW 402/2015 [2018] HKCFI 2057 and 2285, Harris J of the Court of First Instance dismissed an application under section 182 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (the Ordinance), Cap. 32, brought by the liquidators of a company in liquidation seeking to void two payments made out of the company’s bank account after commencement of the winding up proceedings, and further ordered that the liquidators be held personally liable for the costs of the unsuccessful application.
Key Facts
In the past couple of decades, jurisdictions all over the world have been required to grapple with problems arising out of corporate insolvencies with cross-border elements. Solving these problems has required considerable judicial flexibility and innovation, but judges in some jurisdictions have been helped by the enactment of legislation designed to deal with cross-border status.