In Hong Kong, there is currently no statutory provision relating to the rescue of companies. Accordingly, in circumstances where the directors of a company determine that it is in financial difficulty, it is often the case that the only option available to them, (in the absence of their ability to negotiate a standstill agreement), is [...]

The following is summary of the rights and entitlements of employees in the event that an employer becomes subject to Compulsory Winding up proceedings.
Under the provisions of S.265 of the Companies Ordinance, an employee has claims against an insolvent employer. Some are preferential, others are unsecured. When a company is wound up, the Protection [...]

The Court has long had the power to remove liquidators in both voluntary liquidations (pursuant to section 252 of the Companies Ordinance) and compulsory liquidations pursuant to section 196(1), although the power has been used very rarely. However, in recent years, the issue has come before the Court on a number of occasions, with interesting [...]

Three recent cases highlight the robust approach which the Court is likely to adopt when faced with applications for the removal of liquidators.
In the first case, the Official Receiver made an application to Court for the removal of a provisional liquidator appointed by him in 28 cases under the Panel T Scheme. In respect of [...]

Since 1996 the Official Receiver’s Office has been contracting out compulsory liquidation work in Hong Kong.
Initially this was limited to Non-Summary cases, that is those liquidations with assets in excess of HK$200,000. This was known as the Panel A and all firms on the Panel had to satisfy the Official Receiver’s Office that they [...]

The Scheme of Arrangement process can be somewhat cumbersome and expensive. However, in the absence of a formal rescue procedure, in practical terms it is the only tool currently available to facilitate the rescue of distressed companies.
In this section we will look at the background to the use of Schemes in Hong Kong, the [...]

Why we use Schemes in Hong Kong to Rescue Distressed Companies
In Hong Kong, there is no formal process which provides a moratorium to protect a financially distressed company against its creditors whilst efforts are made to restructure it.
Attempts have been [...]

This is often called a Composite Document
It will set out the background to the company’s affairs explaining the reasons for the difficulties faced by the company. It will contain statutory information relating to the company, its accounting history, but more [...]

At the respective meetings, it is necessary for a majority of 75% in value and 50% in number to approve the proposed scheme. It is important to appreciate that this majority must be achieved at the meeting of every class of creditors and shareholders which is held.
Classes
The issue of classes has been dealt [...]

Assuming that the necessary majorities are achieved at the respective meetings of the different classes of creditors and shareholders. It is then necessary for the chairman of the meeting to report to the court on the outcome of the various meetings. A further hearing, known as the Sanction Hearing, is then held, at which the [...]