Did you know... that in the recent case of Re MF Global Hong Kong Limited [2011] HKCFI 1998, where money of one client in the segregated bank account of a failed brokerage cannot specifically be distinguished from that of another client, and practical considerations do not favour a forensic tracing of each client's entitlement, the court held that a "pari passu ex post facto" approach to distribution of the trust funds would instead be more appropriate.

Also, the court exercised the jurisdiction recognised in Re Berkeley Applegate (Investment Consultants) Ltd (No 2) [1989] Ch 32 and ordered that the costs and expenses of the brokerage's provisional liquidators in administering, collecting and dealing with the client money, including the costs and expenses of their application for court directions and those associated with effecting the interim distribution, be paid out of the client money prior to any final distribution and be borne on a pari passu basis by the qualifying clients.

In the last two decades in Hong Kong, we have seen a series of brokerage failures. Over the years, a substantial body of local case-law has been developed. In the MF Global decision considered above, the court built on and reinforced long-standing principles with emphases on both fairness and practicability. Mayer Brown has a track record of assisting administrators and liquidators in the winding-up of failed brokerages, and is well placed to assist you in achieving the best outcome whether you are an office-holder or a claimant.

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