Rights, Powers and Duties of the Debtor and Creditors in Insolvency Proceedings in Hong Kong
The ICFAI Journal of International Business Law, Vol. 2, No. 1, p. 74, 2003
9 Pages Posted: 5 Feb 2010 Last revised: 13 Feb 2010
Date Written: 2003
Drastic changes were made to the Bankruptcy Law of Hong Kong after the British colony of Hong Kong became a Special Administrative Region of the People’s Republic of China and the revised law came into operation in 1998. This article explains the various issues and processes of liquidation of companies and the Corporate Rescue proposal known as “Provisional Supervision” under the Companies Bill of 2001 in Hong Kong. When the company is under liquidation the creditors’ actions will be limited to the extent of realization of the property that is under charge to the secured creditors. But, in the case of “Provisional Supervision”, all the creditors will be bounds by a moratorium for an initial period of 30 days and it may extend to six months. The employees of the insolvent company are entitled to priority of wage claims pursuant to Sec. 265 of the Companies Bill. The liquidator of the company is empowered to sell the real and personal property of the company by public auction or private contract under Sec. 198 and Sec. 199(2)(a) of the Companies Bill. The purchasers of the corporate assets should take the necessary precautions to minimize their risks.
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