A Hong Kong court has severely criticised the provisional liquidators (PLs) appointed by the court in the company’s place of incorporation in the Cayman Islands, for trying to interfere with the rights of creditors in Hong Kong and to bypass the statutory scheme of winding-up in Hong Kong. In GTI Holdings Limited [2022] HKCFI 2598, the Honourable Madam Justice Linda Chan said it was a matter of concern to see that solicitors and counsel engaged by the PLs in Hong Kong "did not bring home to the provisional liquidators their duties owed to the creditors and to this court".

This article first appeared in Volume 20, Issue 1 of International Corporate Rescue and is reprinted with the permission of Chase Cambria Publishing - www.chasecambria.com.

Synopsis

According to the U.S. Bureau of Labor Statistics, approximately 20 percent of new businesses fail during the first two years of being open, 45 percent during the first five years and 65 percent during the first 10 years. The unprecedented financial challenges of COVID-19 have increased the number of business failures and economists project that the number of failures will accelerate in the quarters ahead.

On 24 December 2020, the Federal Court of Australia published reasons for a decision in which I appeared for the liquidators of two related companies, Bestjet Travel Pty Ltd (in liq) and Wynyard Travel Pty Ltd (in liq). The decision can be accessed here.

Although it is a relatively unknown procedure, examinership may hold the key to the survival of businesses dealing with the financial consequences of the COVID-19 pandemic.

What is examinership?

Innovations to the Act in late 2015 seek to modernize and simplify collective proceedings in OHADA member states.

Introduction

Getting your house in order

Understand your counterparty risks

It is very important in the present climate to understand your contracts and your counterparty risks. We are finding an increasing number of clients “stress testing” their contracts and considering the consequence of an insolvency event. This is good practice; particularly since to identify weaknesses in structures and counterparty risk upon insolvency may afford you the time to fix it before things do go wrong.

Where are the documents?

Introduction

High Court provides guidance on voluntary administration and creditors’ meetings under COVID-19 Alert Level 4

A recent decision of the High Court provides helpful guidance for insolvency practitioners on how aspects of the voluntary administration regime should operate in the context of the COVID-19 pandemic.