Introduction

Clearly there are some major economic challenges ahead.

Many businesses may be able to withstand the challenges ahead but it may very well be that their trading counterparties (whether suppliers, customers or other stakeholders) will not. Whilst these times can represent an opportunity for some, such as potential acquirers (whether of businesses, assets or distressed debt), in most cases, the climate represents a threat to businesses.

On Saturday 28 March, Secretary of State for the Business, Energy and Industrial Strategy, Alok Sharma, announced a proposal for the urgent reforms to UK insolvency law, designed to protect companies and their directors during the COVID-19 outbreak.

Wrongful Trading (section 214 Insolvency Act 1986)

It was announced that there would be a temporary suspension of section 214 Insolvency Act 1986 in relation to wrongful trading.

Sky News reports today that the Insolvency Service is considering reforms to insolvency laws which may include a moratorium on winding up petitions against companies and the suspension of rules on wrongful trading.

China Lumena New Materials Corp (in provisional liquidation) [2020] HKCFI 338 (decision made on 23 January 2020 and reasons given on 4 March 2020)

This is the first reported scheme of arrangement in Hong Kong seeking to compromise debt governed by PRC law. Under the Gibbs Rule, a foreign composition does not discharge a debt unless it is discharged under the law governing the debt. In this case, the Hong Kong Court considered an exception to the Gibbs Rule and more generally the principles of sanctioning a scheme.

Background

Construction litigation is no stranger to insolvency, including insolvent claimants. This is also the case for adjudication, a fast and commercially driven form of dispute resolution for the construction industry. However, there has been considerable uncertainty as to the enforceability of adjudicators’ awards where a claimant is insolvent and receives a favourable decision. Recent cases have shed some light on this issue and have started to untangle the statutory difficulties when insolvency meets adjudication.

Re System Building Services Group Limited [2020] EWHC 54 (Ch)

Summary

A recent High Court ruling has considered the character and extent of directors’ duties in the context of insolvency.

In System Building Services, Insolvency and Companies Court Judge Barber (“ICCJ Barber”) considered, amongst other things, the nature of a director’s duties to a company and whether those duties survive the company’s entry into an insolvency process.

Sit Kwong Lam v Petrolimex Singapore Pte. Ltd [2019] HKCA 1220案 (裁决日期：2019年11月1日)

But Ka Chon v Interactive Brokers LLC [2019] 5 HKC 238案 (裁决日期：2019年8月2日)

在Lasmos Limited v Southwest Pacific Bauxite (HK) Limited [2018] HKCFI 426一案中，当案件所涉债务是一项仲裁协议的标的时，公司法庭改变了原先在这种情况下如何裁定清盘程序的做法（被称为“Lasmos裁决”）。在近期的两起破产案件中，上诉法庭对Lasmos裁决发表了附带意见。

Lasmos案之前的裁决

上海华信国际集团有限公司（在中国大陆清算）[2020] HKCFI 167 (裁决日期：2020年1月13日)

这是香港法院首次向中国大陆法院指定的一家中国大陆公司的管理人发出承认令的案件。该案还考虑如果在送达第三债务人暂准令（garnishee order nisi）后，破产令在外国颁布，此时是否应将第三债务人暂准令转为绝对命令。

案件背景

上海华信国际集团有限公司（以下简称为“CEFC”）是一家在中国大陆注册成立的投资控股公司，是一家企业集团的一部分，该企业集团的业务包括资本融资、石油精炼和基础设施。 2019年11月，上海市第三中级人民法院（以下简称为“上海法院”）下令CEFC破产清算，并指定了联合管理人（以下简称为“管理人”）。

CEFC的资产包括对其在香港地区的子公司上海华信集团（香港）有限公司（以下简称为“香港子公司”）的重大债权，该子公司正在清算中。CEFC已就该债权提供债务证明。

Introduction

CEFC Shanghai International Group Limited (in Liquidation in the Mainland of the People’s Republic of China) [2020] HKCFI 167 (date of judgement 13 January 2020)

This is the first case in which the Hong Kong Court granted a recognition order to administrators of a PRC company appointed by a PRC Court. The case also considered whether a garnishee order nisi should be made absolute if a foreign bankruptcy order is made after the service of the garnishee order nisi.

Background