The impact upon the economy as a result of COVID-19 sees no signs of abatement in the near-term and not a single sector of industry has been spared. Economic data shows that GDP declines in real terms, along with private expenditure.

Perhaps some of the rounds of stimulus distributed by the HKSAR Government will help cushion the local economy, but in any event any recovery will be patchy at best with some sectors facing a much longer period of uncertainty than others.

Introduction

Rather unfortunately, there are no statutory provisions available to a company to set aside a statutory demand. If a company is served with a statutory demand and disputes the alleged debt, save for agreeing with the alleged creditor not to present a winding-up petition, it has no alternative but to seek relief from the court and obtain an injunction restraining the presentation of a winding-up petition.

Can a foreign order or judgment be immediately enforced in Hong Kong? Generally, the answer is no. Depending on where the judgment comes from, either it must first pass registration under the Foreign Judgments (Reciprocal Enforcement) Ordinance, or if not caught by that ordinance, there is also a common law regime for other judgments.

A crucial aspect of cross-border insolvency cooperation is the recognition of foreign proceedings and providing assistance to foreign office holders. A helpful explanation of the purpose of recognition was provided by Lord Hoffman in Cambridge Gas:“[t]he purpose of recognition is to enable the foreign office holder or the creditors to avoid having to start parallel insolvency proceedings and to give them the remedies to which they would have been entitled if the equivalent proceedings had taken place in the domestic forum”.

Handing over control of a company to strangers is a tough decision, but is one that is ever-present for a director facing the prospect of insolvency. Ian De Witt and Troy Greig point to some high-level issues that any sensible director facing this scenario should bear in mind.

1. Letting go, but staying involved

A bankrupt’s solicitors can be required to handover to the trustees in bankruptcy the bankrupt contact information, full details of last known whereabouts, and client trust account ledger records, pursuant to section 29 of the Bankruptcy Ordinance.