The cases appear to show a trend by the courts to reconsider previously accepted approaches to preference claims. Rossana Chu is the managing partner and Jacky Chan is an associate at LC Lawyers. UNFAIR PREFERENCE. Slotine explains the nuts and bolts of the two routes towards closing down a solvent company in Hong Kong: members' voluntary winding-up and deregistration. A debtor who has given an unfair preference to a person who, at the time the unfair preference was given, was an associate of his (otherwise than by reason only of being his employee) is presumed, unless the contrary is shown, to have been influenced in deciding to give it by such a desire as is mentioned in subsection (4). Acted for a Hong Kong securities broker in defending a claim for mishandling client's shares in their accounts involving more than HK$100 million. Handle proceedings in Hong Kong against various carriers in relation to one of the world's largest container vessel casualties. Advice should be sought early on as the surrounding circumstances of the payment or granting of the security (e.g. The rules governing unfair preference are found under sections 266, 266A, and 266B of the Companies (Winding-Up and Miscellaneous Provisions Ordinance (Cap. An unfair preference occurs where a payment has been made by the company to a creditor when it is insolvent, but before the commencement of its winding up, with the effect of putting the creditor in a better position than it would otherwise have been in the liquidation of the company. Ivy read law at the University of Hong Kong where she graduated with First Class Honours, ranking second in class. The New Companies Ordinance (Cap. The grant of security by a debtor company may be invalidated if the grant of security constitutes an unfair preference. An unfair preference occurs where a payment has been made by the company to a creditor when it is insolvent, but before the commencement of its winding up, with the effect of putting the creditor in a better position than it would otherwise have been in the liquidation of the company. . Overview. Insolvency Law: A Comparative Analysis of the Preference Tests in the Hong Kong Special Administrative Region (HKSAR) and Australia1 By Shirley Quo2 Abstract This article examines the unfair preference tests under corporate insolvency legislation in the HKSAR and Australia and undertakes a comparison of the law as it For a debtor's self-bankruptcy, the petitioner has to pay $1045 as court fee to the. . This comes as no surprise given that the Hong Kong unfair preference provisions, in both a bankruptcy and corporate context as discussed below, are derived from their UK counterpart. Rossana Chu, Managing Partner of LC Lawyers LLP, is a highly regarded leading lawyer in the mergers & acquisitions and capital markets sectors. The Amendment Ordinance brings Hong Kong's winding-up procedures and insolvency law in line with international developments. An unfair preference must contain two further elements to be a "voidable transaction" under the Act. . An unfair preference (or "voidable preference") is a legal term arising in bankruptcy law where a person or company transfers assets or pays a debt to a creditor shortly before going into bankruptcy, that payment or transfer can be set aside on the application of the liquidator or trustee in bankruptcy as an unfair preference or simply a preference. . A transaction will not be an unfair preference if it took place in the ordinary course of the company's business. On 14 May 2021, the Supreme People's Court of Mainland China (SPC) and the Department of Justice of Hong Kong SAR signed a Record of Meeting on Mutual Recognition of and Assistance to . As we previously announced on 7 September, White & Case is very pleased to present the second edition of the White & Case Asia Pacific Restructuring and Insolvency Guide.The Guide gives a detailed overview of the restructuring and insolvency laws, regulations and procedures . An unfair preference arises where (i) a payment has been made to a creditor in the period leading up to the commencement of the winding up, and (ii) the effect of that payment is to put the recipient in a better position than other creditors when the liquidation starts. (In Liquidation) v Tradepower (Hong Kong) Ltd and others (2009) 12 HKCFAR 417 held that "intention to defraud" is an objective standard within . Under the overhaul, new stocks will . The right to a dividend is normally a right to a fixed percentage of the nominal value of the shares and can be cumulative (that is, if no dividend is declared in any year, the arrears can be carried forward). Lending into Hong Kong Any person, not being an "authorized institution" authorised by the Hong Kong Monetary Authority under the Banking Ordinance (Cap. In . schemes of arrangment; obtaining the recognition of the Hong Kong liquidators' role and powers by the Courts or authorities of foreign jurisdictions. The court appointment of a provisional liquidator, which displaces the company's directors and brings about a statutory stay on proceedings, has been used as a means to facilitate a corporate rescue. can have a substantial impact on whether a Court finds that there has been an unfair preference. Partners CHU . Published: 28/06/2021. . Travel advice for Hong Kong has also been… 50. In the UK, section 994 of the Companies Act . Hong Kong: Derivatives Laws and Regulations 2021. Hong Kong, Insolvency. Another problem for liquidators in Hong Kong is that a defendant in a . This article is the first in a series, highlighting the major changes to . Unfair Preferences. He is an English, Cantonese and French native speaker. Unfair Preferences There is currently an unfair preference regime in Hong Kong for Hong Kong corporate insolvencies which is connected to provisions in the Bankruptcy Ordinance. Unfair preference: the debtor making payment to a creditor by which the recipient . In this case, the appellants, Mark Byers and Mark McDonald, joint liquidators of Pioneer Freight Futures Company Limited ("PFF") brought a claim against the sole beneficial owner of PFF, Ms. Chen Ninging ("Ms. Chen") for the repayment of an unsecured loan from Zenato, a BVI . the name and address of the trustee and the date of their appointment. Determining the scope of Hong Kong's new insolvency law Booth, Charles D.; Smart, Philip St J. Associate. Unfair preferences. Unfair preference payments for individuals. In the event that the Court finds a transaction involves an unfair preference, the Court may make such order as it thinks fit. In Hong Kong, a creditor can petition for bankruptcy against a debtor. Jacky Chan, an Associate of LC Lawyers LLP, advises on mergers and acquisitions, employment and talent . However, claims for the recovery of amounts due, This provides clarity. Unfair Preference in winding up Posted on 12 January 2021 8 July 2021 by admin A company does something or suffers anything which lead to an effect of putting a creditor or guarantor into a better position in the event of insolvent liquidation, such action is regarded as an unfair preference. Powers of Hong Kong Liquidators under the Recognition Pilot Program. 979 King's Road, Quarry Bay, Hong Kong. Experience. The case of Lau Siu Hung and Another v Krzysztof Marszalek and Another [2013] HKEC 936 appears to be the first authority in Hong Kong on the effect an annulment of a bankruptcy order has on debts which remain unproven when an annulment order is made. She also advises on restructuring and compliance matters. Hong Kong Company Law 11 Section D: Capital and corporate transparency . On 14 May 2021, the governments of Hong Kong and mainland China announced an arrangement for mutual recognition of and assistance to insolvency proceedings that allow liquidators and bankruptcy administrators from both Hong Kong and mainland China to apply to the other courts for recognition of insolvency proceedings. This is the Hong Kong chapter of the second edition of the White & Case Asia Pacific Restructuring and Insolvency Guide. . is adjudged bankrupt and has at the relevant time entered into a transaction with any person at undervalue or given an unfair preference, the Court may make an order to restore the position as if he had not entered into that transaction or preference. In Hong Kong, a creditor can petition for bankruptcy against a debtor. Conclusion. The Hong Kong Companies (Winding-Up and Miscellaneous Provisions) Ordinance provides guidance with respect to determining the solvency of a Hong Kong company. He was called to the Hong Kong Bar in 2000 and to the Inner Bar in 2016. However, a debtor stressed by his personal debts, may also make a self-bankruptcy to declare himself bankrupt. Acted for the former directors of a Hong Kong company in liquidation against the liquidators' claims for misfeasance and unfair preference claims in Hong Kong Court involving HK$300 million.