1. Introduction

The winding up of insolvent companies in Hong Kong is governed by the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) (“CWUMPO”), the Companies (Winding-up) Rules (Chapter 32H) (“CWUR”) and case laws. They provide the legal source of civil liabilities for directors, shareholders and senior management.

2. Directors

El reconocimiento de un derecho de separación por el atesoramiento abusivo de beneficios supone un mecanismo de protección de la minoría. Su ejercicio, sin embargo, puede resultar perjudicial para la sociedad, que tendrá que abonar al socio saliente el valor de su participación. Por este motivo, siempre se ha planteado la posibilidad de enervar, de algún modo, el ejercicio del derecho. La Sentencia del Tribunal Supremo de 25 de enero se ocupa de un caso de esta naturaleza reconociendo, en un supuesto muy concreto, el carácter abusivo del ejercicio del derecho de separación.  

Did you know it may be possible to continue using the trading name of your liquidated company?

TLT’s Insolvency Team in Belfast were recently successful in obtaining the leave of Court allowing the Director of a liquidated company to continue to use the trading name of the liquidated company with a new company. The Insolvency (Northern Ireland) Order 1989 makes provision for such an application to be made to use what would otherwise be a “Prohibited Name”.

How the Belgian Cour de Cassation qualifies a director of a company as an “enterprise”

Since the entry into force of the new Belgian Code of Economic Law (‘BCEL’) it is possible for a company director, in its personal capacity, to be qualified as an “enterprise” and consequently to be declared bankrupt.

The definition of an enterprise is set out in Article I.1, 1° BCEL and relates to the following organisations:

a) any natural person who independently performs a professional activity;

Thorn (liquidator), in the matter of South Townsville Developments Pty Ltd (in liq) (Company) involved an ex parte application by a liquidator seeking approval under section 477(2B) of the Corporations Act 2001 (Cth) (Corporations Act) to enter into agreements to fund existing litigation and a request for the suppression and non-publication of certain details in those agreements.

Background

The government has now announced that the remaining temporary restrictions created by the Corporate Insolvency and Governance Act 2020 are being lifted and that the insolvency regime will return to its pre-pandemic position with immediate effect from 1 April 2022. This includes removing the temporary restrictions placed on creditors when presenting winding-up petitions against debtors who are unable to pay debts they owe.

Financial support for businesses impacted by COVID-19, legislative provisions (such as the statutory relaxation to insolvent trading liability) and general creditor leniency have resulted inhistorically low insolvency appointments during the last two years.

Dale G. Higer is an attorney and a long-time Commissioner for the State of Idaho on the Uniform Law Commission. His newest role is Chair of the Commission’s newly-formed Study Committee on Assignments for Benefit of Creditors.

What follows is Mr. Higer’s report on the Commission and on the work of the newly formed Study Committee.

Uniform Law Commission

Morton as liquidator of MJ Woodman Electrical Contractors Pty Ltd v Metal Manufactures Pty Limited [2021] FCAFC 228

The Full Court of the Federal Court confirms that a statutory set-off under s 553C(1) of the Corporations Act2001 (Cth) is not available against a liquidator’s claim for the recovery of an unfair preference under s 588FA of the Act.

Background

Company insolvencies have recently hit a record high and are on an upward trend in the aftermath of the COVID-19 pandemic. This means that we are likely to see an increase in claims against directors, especially in light of new legislation that expands the government’s powers of investigation.

Record high insolvencies