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.

Did you know...

it has been argued that a factoring arrangement over invoices of a company could be challenged as a charge over book debts and thus is void against liquidators of the company unless registered under section 80 of the Companies Ordinance.

As many will know, a failure to “...do all that is reasonable for the purpose of bringing the statutory demand to the debtor’s attention...” may result in an annulment of a bankruptcy order. But how is this requirement of Rule 46 of the Bankruptcy Rules met?

Hong Kong's highest court has considered for the second time in recent years the conduct of examinations under section 221 of the Companies Ordinance. That section enables (amongst other things) a court to compel any persons whom it believes may have information concerning the affairs or dealings of a company in liquidation to be examined in private under oath.

Anglo Starlite Insurance Co. Ltd. (the "Company") was placed into provisional liquidation on 8 May 2009 following an investigation by the Hong Kong Insurance Authority ("IA"). Peter Whalley and Jan Blaauw of PricewaterhouseCoopers were appointed as joint and several provisional liquidators.

The SFC has applied to the High Court for an order directing Lehman Brothers Asia Ltd to comply with a SFC notice to produce certain records in connection with its investigation of the offer and marketing of Minibonds. The SFC notice required Lehman Brothers to produce to the SFC all documents relating to the assessment of Minibonds by an internal Lehman Brothers committee. Lawyers for Lehman Brothers objected to the production of certain documents on the ground that such documents were the subject of a claim of legal professional privilege.

Ernst & Young ("E&Y") has settled the Akai Holdings ("Akai") case with Akai’s liquidator, Borrelli Walsh. In this case, E&Y was accused of negligence for failing to avert Akai’s collapse in 2004.

E&Y had been Akai’s auditor prior to the collapse, which remains Hong Kong’s biggest ever insolvency. The terms of the settlement are confidential.

On 24 September 2009, the South China Morning Post reported that new evidence had come to light which suggested that E&Y’s staff had tampered with or faked hundreds of documents relating to its audit of Akai.

No Respite for Distressed Companies in Hong Kong

In Hong Kong, a company that is financially distressed may generally only avoid being liquidated or wound up if it:

In Regent National Enterprises Limited v Goldlion Holdings Limited [2009] HKCFA 58, the Hong Kong Court of Final Appeal found that a liquidator had acted reasonably in relying on his solicitor's advice and invoking a force majeure clause, even though the advice later turned out to be erroneous.

The number of international arbitrations involving the Hong Kong International Arbitration Centre doubled between 2004 and 2008. The number of winding up petitions is also currently on the rise because of the poor global economic environment. This article discusses conflicts that may arise between the statutory insolvency regime and the contractual rights of parties to arbitrate their disputes in Hong Kong.

Can Arbitration Be Used To Circumvent Statutory Insolvency Regimes?