[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN HONG KONG] 55
(C) Post-Petition Procedures Upon presentation of a bankruptcy or winding- up petition, the petition will be fixed for a hearing before a Master of the High Court. For winding-up petition, before the hearing, the petition shall be verified by affidavit, and served on the debtor, the Official Receiver and the Chief Bailiff. The petition shall also be gazetted and advertised on newspapers. The petitioner shall satisfy the Registrar of the High Court who certifies that the petition has been duly verified, served, gazetted and advertised, and that all applicable rules have been complied with. Once the Registrar’s certificate is issued, and if the debt remains unpaid in whole or in part, the Petitioner may seek for a winding-up order to be entered. For bankruptcy petition, before the hearing, the petition shall be verified by affidavit, and shall be served on the debtor, the Official Receiver and the Chief Bailiff. The bankruptcy petition must be served on the debtor personally, or by other substituted means (such as by advertisement on newspapers or by e-mail) as directed by the Court upon the petitioner’s application for an order of substituted service. The petitioner shall satisfy the Court of the service of the petition on the debtor by filing an affirmation of service. Once service requirement is satisfied, and if the debt remains unpaid in whole or in part at the hearing of the bankruptcy petition, the Petitioner may seek for a bankruptcy order to be entered. If the winding-up/bankruptcy petition is opposed at the hearing, the Master does not have jurisdiction to hear the case, and will adjourn the petition to another hearing before the Companies Judge or Bankruptcy Judge (as the case may be), who will decide or make direction on the disposition of the petition.
Winding-up proceedings and bankruptcy proceedings are generally regarded as summary procedures as they provide a relatively streamlined court process, as opposed to a full- blown trial. For instance, parties will only rely on affidavit evidence and will be restrained from calling witnesses at the hearing. The Court does not normally decide the merits of the underlying debt, which is expected to be resolved in separate legal proceedings. In case the opposing debtor is able to satisfy the Court that there is a bona fide dispute on substantial ground in respect of the debt, the Court may dismiss the petition. Put it differently, any petitioner who commences insolvency proceedings knowing that the debt is subject to a bona fide dispute on substantial ground may risk the petition being dismissed with an indemnity costs order being granted against the petitioner, on the ground of an abuse of process. (3) Voluntary Insolvency An individual debtor can enter into self- bankruptcy by filing a debtor’s bankruptcy petition, together with a statement of affairs, to the Official Receiver and the High Court. Likewise, a company can enter into creditor’s voluntary winding-up or member’s voluntary winding-up. Corresponding approvals of the creditors and the members are required. Compared with compulsory insolvency, voluntary insolvency is generally faster and more cost-effective, benefiting the creditors as a whole. (4) Liquidation (A) Appointment of Trustees-in-bankruptcy and Liquidators When bankruptcy or winding-up orders are made, trustees-in-bankruptcy or liquidators will be appointed. In a situation where there is
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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