Introduction Hong Kong At a Glance Population: 7 million Languages: English, Cantonese and Mandarin Time zones: 8 hours ahead of Greenwich Mean Time Climate: Subtropical with long, hot summers and pleasant temperate winters Political System
The Third Party (Rights Against Insurers) Ordinance Cap 273 (TPRAI) in Hong Kong allows third parties to claim against the wrongdoer’s liability insurer in the event of insolvency. The Supreme Court of New Zealand (the country’s highest court) found in BFSL 2007 Ltd (in liquidation) v. Steigrad [2013] NZSC 156 (known as the Bridgecorp case) that under the equivalent statutory provision in New Zealand, payment of defence costs do not reduce the limit of indemnity.
On a recent Mayer Brown JSM application (on behalf of the Liquidators of one of the Lehman Brothers entities) to reduce and expunge proofs of debt, the Hong Kong High Court has ruled that creditors who receive an overpayment of dividends due in respect of a proof of debt which has been “improperly admitted” (rule 96, Companies Winding-Up Rules) must give credit for those overpayments before receiving further dividends in the liquidation (Re Lehman Brothers Commercial Corp Asia Ltd (“LBCCA”) [2014] HKEC 849) (“Proof Appl
In the bankruptcy proceedings in respect of Mr Gabriel Ricardo Dias-Azedo (the "Bankrupt"), the Court of First Instance recently exercised its discretion under sections 37(2) and 97 of the Bankruptcy Ordinance (Cap. 6) (BO) in favour of two creditors and granted them a priority claim against the Bankrupt's estate for their costs in preserving his assets incurred before receiving notice of the bankruptcy petition.
Background
On 7 January 2014 the Financial Services and Treasury Bureau of the Hong Kong Government (FSTB), in conjunction with the Hong Kong Monetary Authority (HKMA), Securities and Futures Commission (SFC) and the Insurance Authority (IA), issued a first stage consultation regarding the introduction of a resolution regime for financial institutions in Hong Kong (the “Consultation”). The Consultation initiates a discussion as to the regulatory structure and principles that would be required to establish an effective resolution regime for financial institutions in Hong Kong.
The existing provisions on the winding up of companies in Hong Kong will continue to operate after the new Companies Ordinance comes into effect, which is expected to be on 3 March 2014.
The new Companies Ordinance is an overhaul covering many aspects of the existing Companies Ordinance, including the following:
Did you know that in the recent matter of Chan Kam Cheung v. Sun Light Elastic Ltd & Another1 the petitioner's alternative remedy for winding-up was struck out by the court?
As we pointed out in our Legal Update of 30 January 2014 ("New Companies Ordinance – Old Winding Up and Insolvency Regime"), the new Companies Ordinance for Hong Kong (Chapter 622) is scheduled to take effect from 3 March 2014 but it will not cover the winding-up and insolvency regime.
In The Joint and Several Liquidators of QQ Club Limited (in liquidation) v. Golden Year Limited (HCCW 245/2011, 9 April 2013) (QQ Club), the Court of First Instance held that a liquidator's costs in pursuing an avoidance claim are "fees and expenses properly incurred in preserving, realizing or getting in the assets", and are payable out of the company's assets in priority to all other payments prescribed in rule 179 of the Companies (Winding-up) Rules. In reaching this conclusion, the court distinguished the English Court of Appeal's decision in Lewis v.
In the recent case of Lau Siu Hung v. Krzystof Marszalek (HCCW 484/2009, 17 June 2013) the Court of First Instance held that an annulment of bankruptcy does not debar a creditor, who has not proved his provable debt, from asserting his claim after the annulment.
Procedural Background