DLA Piper Hong Kong recently represented Dr. Hui Chi Ming as a judgment creditor (Judgment Creditor) and petitioner to a bankruptcy proceeding against Mr. Koon Wing Yee (Debtor). In the judgment of Re Koon Wing Yee [2023] HKCFI 2301, the Court of First Instance made a bankruptcy order against the Debtor because he had failed to show a bona fide dispute on substantial grounds regarding the debt.
If a company becomes insolvent, it is crucial that its directors comply with their legal duties. Failure to do so can result in personal liability for the company’s debts as well as legal action and disqualification from being a company director or being involved in a company in the future.
We look at exactly what a director’s duties on company insolvency are and some of the risks to be aware of in dealing with an insolvency.
What is insolvency?
When does the directors' duty arise to consider creditors' interests in the face of insolvency if a liability is disputed? Hayley Capani and Kate Garcia consider the case of Hunt v Singh and conclude we still don't have all the answers.
In the statement of claim filed in 2019, a debtor requested that its tax liability be extinguished as being time-barred on the grounds that the creditor had not carried out any enforcement actions since 2013. Moreover, the debtor company was deregistered in 2012.
The High Court of Cassation and Justice has ruled that the creditor cannot be held liable for having remained passive as long as its debtor had been deregistered and had therefore ceased to exist from a legal standpoint and to be a subject of law from whom one can claim the performance of an obligation.
Case Name & Citation
Greylag Goose Leasing 1410 Designated Activity Company v P.T. Garuda Indonesia Ltd [2023] NSWCA 134 per Bell CJ, Meagher JA, Kirk JA
Hyperlink
Date of Judgment
14 June 2023
Issues
On August 25, 2023, the Supreme Court of India (“Supreme Court”) in the case of Vizag Minerals and Logistics Pvt. Ltd. vs. Ravi Shankar Devarakonda & Ors1, while dismissing the civil appeal filed by Vizag Minerals and Logistics Pvt. Ltd.
In the matter of Mr. Santosh Mate (Prop. of Mahalaxmi Traders) vs. M/s Satyam Transformers Private Limited1, the Mumbai bench of the National Company Law Tribunal (“NCLT Mumbai”) held that the conversion of an operational debt into financial debt through an agreement is invalid and impermissible as it would defeat the very objective of the Insolvency and Bankruptcy Code, 2016 (“IBC”) and have the effect of rewriting it.
Brief Facts
This article was first published on India Business Law Journal on 11 September 2023.
In a recent case of Hemalata Hospitals Limited vs. Sh. Siba Kumar Mohapatra RP of Medirad Tech India Limited (“Hemalata Case”),1 the National Company Law Tribunal New Delhi Bench (Court-II) (“NCLT Delhi”) adjudicated on the continuation of related party agreements during the corporate insolvency resolution process (“CIRP”) and upheld the termination of related party agreements by the resolution professional (“RP”) during the CIRP.
In a judgement of the Hyderabad bench of the National Company Law Tribunal (“NCLT”) in the cases of PTC India Financial Services Ltd. v. Vikas Prakash Gupta & Ors.1 and Indo Unique Flame Limited v.