[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN HONG KONG] 54
KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER HONG KONG LAW (1) Introduction
ordinary resident, or has had a place of residence, or carries on business in Hong Kong 3 years preceding the petition. (B) Company Winding-up A creditor’s winding-up petition may be presented against a company who is likewise unable to pay a debt being a liquidated sum exceeding HK$10,000. Similarly, a company is deemed to be unable to pay such debt if a statutory demand is unsatisfied within 21 days upon service. An opposing debtor may apply for an injunction restraining the presentation of a winding-up petition based on the statutory demand. A winding up petition can be presented against a company incorporated in Hong Kong, and additionally, a company incorporated outside Hong Kong if various requirements are met. In gist, for non-Hong Kong companies to be wound up in Hong Kong, there must be a sufficient connection with Hong Kong, a reasonable possibility that the winding-up order would benefit the applicants, and the Court’s ability to exercise jurisdiction over one or more persons in the distribution of the company’s assets. Apart from debt grounds, a company can be wound up if it suspends, or does not commence, business for a year, if it has no members, if there is an event of dissolution under the articles, or if it is just and equitable to do so. Just and equitable ground usually arises in the context of shareholders dispute in small to medium sized private companies, for example, where there is a breakdown of trust and confidence between the shareholders or a deadlock in management.
Hong Kong provides effective and efficient insolvency resolutions in both compulsory and voluntary contexts, seeking to protect the interests of creditors and companies alike. While Hong Kong does not operate a formal rehabilitation, moratorium or corporate rescue procedure, Hong Kong has an established practice of individual voluntary arrangements and schemes of arrangements, where debts are compromised pursuant to statutory framework. Hong Kong maintains an active cross-border insolvency practice which is consistent with other common law jurisdictions. Given the strong ties between Hong Kong SAR and Mainland China, there is mutual assistance and recognition to bankruptcy (insolvency) proceedings between the Courts of Mainland China and the Court of Hong Kong SAR. (2) Compulsory Insolvency (A) Personal Bankruptcy A creditor’s bankruptcy petition may be presented against an individual who is unable to pay or have no reasonable prospect of being able to pay a debt being a liquidated sum exceeding HK$10,000 or a prescribed amount. A debtor is deemed to be unable to pay such debt if the debt is payable immediately and the debtor fails to satisfy a statutory demand within 21 days on receipt of such demand in its prescribed form. An opposing debtor may apply to set aside the statutory demand within 18 days from the date of service on him of the statutory demand. A bankruptcy petition shall not be presented unless the debtor is domiciled in Hong Kong, is personally present in Hong Kong on the day of presentation of the petition, or has been an
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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