Summary
If a person presents a petition for their own bankruptcy (“self-petition”), are there any safeguards to ensure that the self-petition is genuine, as opposed to a cynical device by the person to buy themselves time to pay, or to give themselves some negotiating position with their creditors?
This interesting question was considered in a recent Hong Kong judgment.
A liquidator is usually involved at the end of a company’s life cycle. The role of a liquidator includes investigating the reasons why a company has failed; collecting, protecting and realising the company’s assets; and distributing the proceeds of realisation in accordance with the statutory rules of distribution. The liquidator regime in Hong Kong thus places an emphasis on ensuring that the winding-up of financially distressed businesses is conducted in a fair and orderly manner and under the control and oversight of professionals conversant with the winding-up process and rules.
In Nuoxi Capital Ltd v Peking University Founder Group Co Ltd [2021] HKCFI 3817, Mr Justice Harris held that keepwell disputes should be determined in Hong Kong in accordance with the contractual exclusive jurisdiction clause, notwithstanding the Court recognising the keepwell provider’s Mainland insolvency proceedings.
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Under Hong Kong law, the terms “insolvency”, “liquidation” or “winding-up” are used with reference to companies, and “bankruptcy” is used in relation to individuals. The former are primarily regulated by Companies (Winding Up and Miscellaneous Provisions Ordinance) (CWUO) (Cap. 32), and the latter by the Bankruptcy Ordinance (Cap 6). The article below focuses on the corporate insolvency regime, in relation to financially distressed companies which are unable to pay their debts or discharge their payment obligations.
簡介
最近在Re Hsin Chong Construction Co., Ltd. [2021] HKCFA 14一案中，終審法院推翻了原訟法庭及上訴法庭（「上訴庭」）的裁決。與上訴庭及原訟法庭的裁決相反，終審法院裁定，於新昌開始清盤後出售其在合營協議項下剩餘權利及權益的交易是無效的。
背景
新昌營造廠有限公司（「該公司」）及Build King Construction Limited（「Build King」）於2013年11月訂立一份合營協議（「合營協議」），以成立及經營一間合營公司（「合營公司」）。合營公司於2016年6月獲得一項大型政府項目合約，其中該公司佔65% 權益，Build King佔餘下35% 權益。
該公司於2017/2018年度開始面臨財政困難。2018年8月27日，該公司被入稟清盤，導致該公司的銀行帳戶被凍結。
Introduction
In the recent case of Re Hsin Chong Construction Co., Ltd. [2021] HKCFA 14, the Court of Final Appeal (“CFA”) overturned the decisions of the Court of First Instance and the Court of Appeal (“CA”) below. The CFA found, contrary to the CA and Court of First Instance, that the disposition of Hsin Chong’s residual rights and interests under a joint venture agreement after the commencement of winding up was void.
Background
简介
最近在Re Hsin Chong Construction Co., Ltd. [2021] HKCFA 14一案中，终审法院推翻了原讼法庭及上诉法庭（「上诉庭」）的裁决。与上诉庭及原讼法庭的裁决相反，终审法院裁定，于新昌开始清盘后出售其在合营协议项下剩余权利及权益的交易是无效的。
背景
新昌营造厂有限公司（「该公司」）及Build King Construction Limited（「Build King」）于2013年11月订立一份合营协议（「合营协议」），以成立及经营一间合营公司（「合营公司」）。合营公司于2016年6月获得一项大型政府项目合约，其中该公司占65% 权益，Build King占余下35% 权益。
该公司于2017/2018年度开始面临财政困难。2018年8月27日，该公司被入禀清盘，导致该公司的银行帐户被冻结。
In two recent judgments, the Hong Kong companies court has set out the principles applicable to winding up companies holding operating subsidiaries in the mainland through intermediate subsidiaries incorporated offshore, most commonly in the BVI. In doing so, the Honourable Mr. Justice Harris highlighted the need for the petitioner to demonstrate a "real and discernible benefit" to creditors, something which will be challenging to prove if the company’s centre of main interests is not in Hong Kong.
As discussed in our previous blog post, the decision for provisional liquidators to apply for directions on the distribution of funds can be a difficult one to make.