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Legal Update

Hong Kong Court Recognises Foreign Liquidators

4 August 2014
Mayer Brown JSM Legal Update

Did you know that a liquidator of a foreign company may seek the assistance of the Hong Kong Court to obtain orders for the production of information which orders are, in substance, of the type made in Hong Kong windings-up under section 221(3) of the Companies (Winding-up and Miscellaneous Provisions) Ordinance?

In the recent matter of The Joint Official Liquidators of A Company v. B and Another1, Harris J confirmed that a liquidator of a foreign company may obtain orders for the production of information and documents in Hong Kong without the need for a parallel winding-up proceeding in Hong Kong to be commenced. In reaching this decision, his Lordship made the following observations:

The Companies Court may pursuant to a letter of request from a common law jurisdiction with a similar substantive insolvency law make an order of a type which is available to a provisional liquidator or liquidator under Hong Kong’s insolvency regime…2

The present application is important for two reasons. First, because it provides an opportunity to state, what should never have been in doubt, namely that Rule 179 [“the authority of the liquidator appointed under the law of the place of incorporation is recognised in England” as set out in “The Conflict of Laws”, Dicey, Morris & Collins, 15 ed] applies in Hong Kong. Secondly, because it demonstrates that there is in Hong Kong a mechanism available to foreign liquidators for obtaining information and documents without having to wind up a company.3

While his Lordship’s decision is important in assisting liquidators of foreign companies to obtain information and documents in Hong Kong, there is a distinction between information and assets. In this regard, his Lordship stated, “[u]nlike the position in personal bankruptcy the common law maintains that a foreign liquidation has no automatic consequences in relation to the property of a foreign company in a local jurisdiction. As a consequence an application needs to be made by a foreign liquidator for an order vesting him with the title to the local property4.

Certainly in our experience, where there is a possibility of there being assets in Hong Kong to which a liquidator of a foreign company may wish to make a claim, perhaps the most prudent approach, if available, remains to make a parallel application for the winding-up of the foreign company in Hong Kong. His Lordship’s decision is, however, a welcome confirmation that to the extent established common law principles require the Hong Kong Court to recognise foreign liquidators, it is both prepared and willing to provide assistance to them.

 

1 [2014] HKCFI 1294. 
2 Ibid at §18. 
3 Ibid at §7. 
4 Ibid at §6.

Authors

  • Richard M. Tollan
    T +852 2843 4551
  • Justine T. K. Lau
    T + 852 2843 4422
  • Edmund M. S. Ma
    T +852 2843 2458

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