ONC Corporate Disputes and Insolvency Quarterly – November 2020
Business Law News
ONC Lawyers
Hong Kong
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ONC Corporate Disputes and Insolvency Quarterly |
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Dear Clients and Friends, This special newsletter aims to regularly update practitioners on important and noteworthy cases in the areas of corporate disputes and insolvency in Hong Kong, the UK and other common law jurisdictions. We would also seek to give alert on important legislative and regulatory initiatives from Hong Kong. In this issue, we have highlighted: |
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· 1 Legislative and Regulatory Alert
· 9 Corporate Insolvency Cases
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Our selection of cases and our analysis of them may not be exhaustive. Your comments and suggestions are always most welcome. Please feel free to contact me at ludwig.ng@onc.hk Best regards, Ludwig Ng Partner, Solicitor Advocate ONC Lawyers
In this Quarterly, unless otherwise stated, the following abbreviations are used:-
− Section numbers refer to those in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32, Laws of Hong Kong); − Rule numbers refer to those in the Companies (Winding Up) Rules (Cap 32H, Laws of Hong Kong); − “BO” means the Bankruptcy Ordinance (Cap 6, Laws of Hong Kong); − “CO” means Companies Ordinance (Cap 622, Laws of Hong Kong); − “the Company” refers to the company which is the subject matter of the disputes or the winding up petition; − “PL” means provisional liquidators |
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HEADLINES OF THIS ISSUE |
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Legislative and Regulatory Alert |
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1. Latest on the Companies (Corporate Rescue) Bill |
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Corporate Insolvency Cases |
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2. Liquidators’ unfair preference summons ordered to be withdrawn following the Court’s finding that s.228A was wrongly used to wind up the Company |
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Chu Kin Hon v Plentiful Mark Ltd (In Creditors’ Voluntary Liquidation) and Others [2020] HKCFI 1315 |
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3. Court warned that PLs could be deprived of their right to receive remuneration and to recover the costs from the estate of the Company for issuing unnecessary and unreasonable summons |
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4. A Bermuda-incorporated listed Company ordered to be wound up immediately, despite a last-minute repayment proposal and third party undertaking |
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5. Accountants are generally regarded as financial advisors. Such relationship must be disclosed in the disclosure statement no matter how minor the work is |
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6. Court-appointed valuer removed for failing to disclose potential conflict of interest |
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Vitaly Orlov v Magnus Leonard Roth and Another [2020] HKCFI 1072 |
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7. Is it necessary for the beneficiary of a debt under a trust to join the trustee as a party to a petition to wind up a company? |
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8. How should liquidators deal with a request to deliver up documents after being discharged from office? |
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Luen Tat Watch Band Manufacturer Ltd v Stephen Liu Yiu Keung David Yen Ching Wai [2020] HKCFI 2610 |
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9. The Privy Council revisited the law on just and equitable winding-up for quasi-partnerships |
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10. When does directors’ duties to take into account the interests of creditors arise? |
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Cross-border Insolvency Cases |
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11. Hong Kong court departed from standard order for recognition of soft-touch provisional liquidators to provide that there should not be a wholesale passing to the provisional liquidators of the control of the Company |
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Re Rare Earth Magnesium Technology Group Holdings Ltd [2020] HKCFI 2260 |
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12. Court of Appeal confirms that the “leverage” created by the prospect of a winding-up order amounts to a sufficient benefit to those applying for it to justify Hong Kong Courts assuming jurisdiction over non-Hong Kong companies |
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13. The Court held that the judgment debtor’s entering into voluntary solvent winding up does not prevent the charging order nisi from being made absolute |
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Paloma Co Ltd v Capxon Electronic Industrial Co Ltd [2020] HKCFI 754 |
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14. Recognition orders set aside for breach of natural justice |
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Heince Tombak Simanjuntak and others v Paulus Tannos and others [2020] SGCA 85 |
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Restructuring Cases |
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15. Think twice before challenging capital reduction |
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Fok Lai Lor Nora v Fok Ying Tung Ming Yuan Development Co Ltd [2020] 1 HKLRD 1170 |
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16. A reminder that the Court will not simply rubber-stamp the wishes of the majority of creditors in sanctioning a scheme of arrangement. Adequate information must be provided to all creditors. |
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Corporate Disputes Cases |
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17. Is the Chairman’s power subject to an implied condition that if his decision was manifestly wrong, it will not be final and conclusive? |
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18. A prayer for winding-up order should be included only if that is the relief that the petitioner prefers or if it is considered that it may be the only relief to which he is entitled |
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19. Directors of a company can be held liable for inducing the company to breach a contract if they do not act bona fide in relation to their duties towards the company |
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Antuzis v D J Houghton Catching Services Ltd [2019] Bus LR 1532 |
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Bankruptcy Cases |
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20. Recent case sheds lights on valuation of shares in listed companies |
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Chow Wai Shing Daniel and Another v Lu Ying [2020] HKCFI 2148 |
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21. Reasonable prospect of being able to pay a debt cannot be relied upon to defeat a petition based on the debtor’s inability to pay a debt, which is payable immediately |
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