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Liquidation in Hong Kong

Oct 27, 2014

A recent Hong Kong Companies Court decision has confirmed that a liquidator of a foreign company can seek the assistance of the Hong Kong Courts in obtaining information from local parties (such as banks and auditors).

In The Joint Official Liquidators of A Company v B and Another, the Hong Kong Companies Court received a letter of request from the Court in the Cayman Islands. Pursuant to that letter of request, the liquidators of A Company (which was incorporated and then wound up in the Cayman Islands), applied for orders for Hong Kong based parties to provide various information on A Company.

Such an order could be made for domestic insolvencies under section 221(3) of the Companies (Winding-up and Miscellaneous Provisions) Ordinance (the “Ordinance”).

In determining whether to grant the orders, Harris J considered both the rules on insolvency in Hong Kong and other common law jurisdictions. He also considered several relevant rules pertaining to conflict of laws and cross border situations.

Harris J stated that the courts in different common law jurisdictions are adopting a consistent and expansive view of the extent to which established common law principles require the court to recognise foreign liquidators and allow the court to provide assistance to them.

Harris J explained that the Hong Kong Companies Court ought to adopt a similar approach to applications for recognition and assistance.

Therefore, where it receives a letter of request from a foreign common law jurisdiction with a similar substantive insolvency law regime, the Hong Kong Companies Court should make an order of a type which is available to a provisional liquidator or a liquidator under Hong Kong’s insolvency regime.

This decision is important for several reasons.

It confirms that if foreign liquidators are met with a lack of co-operation from local parties, the Hong Kong Companies Court is willing to exercise its common law jurisdiction to grant an order to assist them in carrying out their investigations similar to the type made under s. 221(3) of the Ordinance, without having to go through the process of winding up a foreign company in Hong Kong.

Harris J also went on to suggest that it would be highly desirable for the forthcoming Hong Kong insolvency legislation to include provisions dealing expressly with cross-border insolvency situations such as this to meet with the needs of international commerce which is vitally important to Hong Kong.

Publication date: 27th October 2014

For more information on insolvency matters, please contact:-
Jeremy | +852 2861 8403



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