The Hong Kong Court of Final Appeal (the “CFA“) has clarified in a recent judgment the application of section 182 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (“CWUMPO“) and when the court will grant a validation order.

This article deals with the effect on claims, both pre-litigation and post, which are driven by Credit Hire Organisations (CHOs) who are insolvent or begin an insolvency process. We have focused on practical considerations to identify such claims as well as what you will need to bear in mind when handling credit hire claims where the CHO is insolvent.

Background

There are three main strands: -

Initial arrangements have been put in place for mutual recognition and assistance to be provided by courts in Mainland China and Hong Kong in respect of corporate insolvency proceedings. This is a significant and long awaited development which could substantially enhance the ability for cross border insolvencies and restructurings to be administered and implemented across the two jurisdictions.

The High Court has held that an examination conducted pursuant to an order made under s.236 of the Insolvency Act 1986 (“IA”) did not attract witness immunity. The result was that the joint liquidators were permitted to amend their particulars of claim to plead a claim for breach of duty relating to false statements made in the course of the examination: Mitchell v Al Jaber [2021] EWHC 912 (Ch).

On 14 May 2021, the Vice-President of the Supreme People’s Court of the PRC and the Hong Kong Secretary for Justice signed a brief Record of Meeting, setting out a consensus on the mutual recognition of and assistance to insolvency proceedings between the Mainland China and Hong Kong.

Landlords have become used to the concept of the retail CVA over the past few years, but the new post COVID-19 breed of CVAs has been pushing the boundaries as never before. Further, a new restructuring option – described by some as a “CVA on steroids” – is now available to tenants courtesy of the recently enacted Corporate Insolvency and Governance Act: the s26A Restructuring Plan. Restructuring Plans enable companies, with the sanction of the Court, to impose new terms on creditors even in circumstances where not all classes of creditor have approved the plan.

In what is likely to be the most significant change to the UK restructuring and insolvency market since the Enterprise Act 2002, the Court has paved the way for restructuring plans (RPs) under Part 26A to the Companies Act 2006 to be used to compromise the rights of landlords, financial creditors and other unsecured creditors provided the company shows that those creditors are “out of the money”.

In what is likely to be the most significant change to the UK restructuring and insolvency market since the Enterprise Act 2002, the Court has yesterday¹ paved the way for restructuring plans under Part 26A to the Companies Act 2006 ("RPs") to be used to compromise the rights of landlords, financial creditors and other unsecured creditors provided the company shows that those creditors are "out of the money". There may even be no need to ask those compromised creditors to vote on the RP.

The economic uncertainty for companies caused by the Covid-19 pandemic has placed a heavy burden on directors. That burden of responsibility is set to become even heavier as the temporary measures introduced in 2020 to support companies during the pandemic come to an end. Small and medium sized enterprises (“SMEs”) and those businesses operating in the travel, hospitality, leisure and manufacturing industries have been impacted in particular.

The Court of Appeal has struck out Quincecare duty and dishonest assistance claims brought by the liquidators of a company running a Ponzi scheme against a correspondent bank that operated various accounts for the company.