DID YOU KNOW...that interim fees incurred by provisional liquidators (including agents’ fees), previously thought to have been payable from the funds of an insolvent estate without formal taxation, are now required to be taxed.

Summary

The Protection of Wages on Insolvency (Amendment) Ordinance 2012 (the “Ordinance”) was passed by the Legislative Council on 18 April 2012 and came into force on 29 June 2012.

Under the Ordinance, the scope of the Protection of Wages on Insolvency Fund will be expanded to cover:

Foreign companies are frequently used to hold assets or other investments in Hong Kong. Some of these foreign companies are not registered under Part XI of the Companies Ordinance (“CO”) (“Unregistered Companies”). There are various reasons for not registering foreign companies in Hong Kong, including confidentiality and tax benefits. However, there may be some drawbacks to this approach.

Two guidance notes of relevance to the insurance industry were issued recently.

Did you know that the court's guiding principle on assessing remuneration for liquidators in respect of their administration of trust assets held by the company is similar to the principle applicable to liquidation work, that is, on a "value for money" basis rather than as an indemnity against cost?

In a judgment handed down on 6 March 2013, the Hong Kong High Court elaborated on the guiding principles the court will follow when determining whether or not it should exercise its 'exorbitant' jurisdiction to wind up an unregistered overseas company 'which prima facie is beyond the limits of territoriality'.

The insolvency proceedings of the Lehman Brothers' group of companies worldwide ("Group") are among the most complicated ones we have seen. A significant factor contributing to the complexity is that many Group entities hold segregated assets (principally securities and funds) for their clients, which may be individuals or entities within or outside the Group.

Where a company purported to enter into a loan and security transaction with a bank where the transaction displayed clear issues of conflict of interest issues in relation to the company's CEO, held that the bank could not assert that the CEO had apparent authority to enter into the transaction.

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.