It is not uncommon to see that the law governing a loan document is different from that of the debtor company’s place of incorporation. Can the rights of the lender be altered by a restructuring plan sanctioned in the latter? The English court said “no” in a recent case1, applying the longstanding Gibbs rule that also applies under Hong Kong law.
Background
Introduction Hong Kong At a Glance Population: 7 million Languages: English, Cantonese and Mandarin Time zones: 8 hours ahead of Greenwich Mean Time Climate: Subtropical with long, hot summers and pleasant temperate winters Political System
Did you know...that the Official Receiver retains its right to ad valorem fees (relating to pre-conversion realisations) pursuant to the Companies (Fees and Percentages) Order (Cap 32C) (“Fees Order”) on conversion of a compulsory liquidation to a creditors’ voluntary winding-up.
In a precedent-setting decision delivered on 8 February 2018, the Hong Kong Court of First Instance has granted a recognition order in favour of foreign liquidators appointed in an insolvent liquidation commenced by a shareholders' resolution.
Did you know that dispositions of property of a solvent company made after the commencement of a winding-up will unlikely be disturbed unless it can be demonstrated that the disposition is not in the interests of the company?
Did you know...that in urgent circumstances, the court may treat the presentation of a winding-up petition to the judge hearing the application for the appointment of provisional liquidators as being sufficient without the petition in fact having been presented at the office of the court registrar.
In a first in Hong Kong, the Companies Court has recently sanctioned a creditors' scheme of arrangement proposed by a Bermuda-incorporated, Hong Kong-listed company by approving an alternative process pursued by the company and its provisional liquidators so as to overcome the constraints in Re Legend International Resorts Ltd [2006] 2 HKLRD 192; that in Hong Kong, provisional liquidators cannot be appointed for the sole purpose of restructuring a company.
As we pointed out in our Legal Update of 30 January 2014 ("New Companies Ordinance – Old Winding Up and Insolvency Regime"), the new Companies Ordinance for Hong Kong (Chapter 622) is scheduled to take effect from 3 March 2014 but it will not cover the winding-up and insolvency regime.
The Fund provides monetary relief to employees when their employers become insolvent. Currently, employees of insolvent employers may apply to the Fund for ex-gratia payment of sums owed to them by their employers under the heads of wages, wages in lieu of notice and severance payment.
Experienced insolvency practitioners in Hong Kong are all familiar with Hong Kong Court of Appeal's decision of 1 March 2006 in the liquidation of Legend International Resorts Limited1.