Introduction

New statutory provisions have come into effect that will modernise the way documents are filed with the Official Receiver in Hong Kong. The changes, which took place on the last working day of 2023, pave the way for the electronic submission of certain documents to the Official Receiver's Office (ORO) and dispense with the mandatory newspaper advertising of some statements and notices, which going forward will only require publication in the Gazette or other specified means.

Daniel Chow and I had the honor of being invited to engage in and deliver a presentation at a dynamic seminar hosted by the Taxation Institute of Hong Kong. The seminar attendees primarily consisted of skilled tax practitioners and accountants in Hong Kong. During the discussion, we provided the participants with an overview of restructuring and insolvency, along with the most recent market advancements.

Here are a few key topics we addressed during the seminar:

The Federal Court decision of Copeland in his capacity as liquidator of Skyworkers Pty limited (in Liquidation) (Skyworkers) v Murace [2023] FCA 14 stresses the importance of liquidators adequately particularising claims in a Statement of Claim (SOC). In particular, the liquidator in this case was unable to identify the specific dates that the debts were incurred and how these debts arose.

In the final statistics release of this year, the Insolvency Service confirmed that there were 2,466 registered company insolvencies in November 2023 (the December figures will be released early in 2024). Not only was this 21% higher than in the previous November, but 7% higher than the figures in October 2023.

The company insolvencies in November 2023 included:

A Members Voluntary Liquidation ("MVL") is a process undertaken by a solvent company to wind up its affairs in an orderly manner when the company has concluded its activities and the shareholders wish to distribute the remaining assets amongst themselves.

To avail of a MVL, the company must be solvent i.e. the directors must be able to execute a statutory declaration that they are of the opinion that the company will be able to pay its debts in full within 12 months of the commencement of the winding up.

The steps involved

According to a recent report, nearly 6,000 construction companies in the UK are in danger of going out of business. In Hong Kong, a major contractor has lost its licence and was removed from the government's registered list of contractors on 16 November 2023, with the company being given only a month to settle five private residential and commercial projects. When construction companies become insolvent, a host of tricky legal and practical issues come into play.

A bleak picture

This article will look at the recent decision of David Doyle J in In the Matter of HQP Corporation Limited (in Official Liquidation) (7 July 2023) and its effect on the ability of investors to recover damages from a company in which they have acquired shares as a result of a fraudulent misrepresentation.

Introduction

The case involved an application by liquidators for direction in relation to three issues in the winding up of the Company:

Last month, online supermarket Supie went into voluntary administration, owing $2.1 million to more than 4,000 creditors with only $179,000 left in the bank. 118 employees of Supie found out not only that they had lost their jobs, but that it was unlikely they would be paid for their last 2 weeks of work, or for any outstanding holiday pay.

Thanks to an anonymous donor, some wages were able to be paid out. However, the first liquidators report shows that $120,797 in wages and holiday pay is still outstanding to 89 employees. So, what are employees of a failed company entitled to?

Gianfranco Lotito and Andrés Ignacio Lafuente Quiroz, Cuatrecasas

This is an extract from the 2024 edition of GRR's the Americas Restructuring Review. The whole publication is available here.