On 17 July 2023, several changes to the Bankruptcy and Winding-Up Proceedings Practice Directions 3.1 (the “New PD3.1”) will come into effect. This article summarises some of the main changes which may streamline and/or change the procedure for bankruptcy and winding-up applications in Hong Kong.
Bankruptcy Proceedings
- Applicants in a bankruptcy petition based on the failure to comply with a statutory demand will now need to complete an “Application for Leave to File Petition Checklist” set out in Appendix A of the New PD3.1. The Checklist requires the applicant to provide information and confirmations on matters including advertisement of the statutory demand, the draft petition to be lodged, and service attempts of the statutory demand on the debtor together with details of such visits to the debtor’s last known address.
- The New PD3.1 provides that the applicant lodging the petition will receive either leave to file the petition or requisition(s) raised by the court within 28 days of lodging his/her application.
- Service of the statutory demand on the debtor can now be effected by electronic means (including emails, WhatsApp, WeChat or other similar means of communications) if the debtor has agreed with the creditor to use any electronic means to receive documents relating to the debt that is the subject matter of the statutory demand. Alternatively, if the debtor has during the period of 12 months immediately preceding the date of the statutory demand used any of such electronic means for communication with the creditor, the creditor can take advantage of using such means for service of the statutory demand as well.
Winding-Up Proceedings
- The original practice direction prescribed that Petitioner should obtain the certificate of compliance without undue delay. The New PD3.1 now prescribes a specific time limit for obtaining the certificate of compliance. Failure to obtain the same within three months from the date of petition, in the absence of any good reasons, may result in dismissal of the petition.
Changes applicable to both Bankruptcy Proceedings and Winding-Up Proceedings (other than self-bankruptcy petitions and winding-up petitions on “just and equitable” grounds)
- The first hearing of an opposed winding-up petition or bankruptcy petition adjourned by the Master shall, unless the Companies Judge otherwise directs, be listed for hearing in court on a Monday as follows:-
- Winding-up Petitions will be listed at 9:30 a.m.
- Creditor’s bankruptcy petitions will be listed at 10:00 a.m.
- If the Petitioner is represented and intends to seek a substantive order from the Court at the first hearing, there are several new directions that must be complied with:-
- The Petitioner is now required to lodge with the court, via the e-Lodgement platform at https://e-services.judiciary.hk/elodge/hc/, skeleton arguments (not exceeding 10 pages), a list of authorities (if any), and electronic bundles, by 10 a.m. on the Thursday before, and serve such documents on all persons who have filed notice of the intention to appear in the petition and the Official Receiver by the same time.
- Petitioner should note that the electronic bundles must also comply with Practice Direction 3.8 (Directions on Electronic Bundles and Skeleton Arguments).
- The Respondent (if represented) is also required to lodge with the court, via the same platform, his skeleton arguments (not exceeding 8 pages) and list of authorities (if any) by 10 a.m. on Friday, and serve such documents on the Petitioner and Official Receiver by the same time.
- Failure to comply with the above directions may result in adjournment of the petition. The party in default may also be ordered to pay wasted costs to the other party irrespective of merits of the petition.
- Readers should note that an unrepresented Petitioner can lodge his/her skeleton arguments with the court via the electronic platform or in hard copy. The same time limits will, however, still apply.
- A different set of time limits and documents to be lodged electronically applies to a case where the Petitioner is represented and intends to seek directions on further conduct of the petition (as opposed to a substantive order).
- Where, after a winding-up petition has been advertised and/or gazette, and the parties reached an agreement that the petition be dismissed or struck out, the application for dismissal or striking out can now be done without attendance of the parties, provided that an appropriate consent summons signed by all parties is lodged 2 clear days prior to the hearing; and provision is made for the costs of the Official Receiver.
- Similarly, parties can also make joint application to adjourn a winding-up petition via consent summons signed by all parties together with a letter explaining the brief reasons for seeking the adjournment.
It is important for Petitioners to take note of these new changes as failure to comply may result in adverse consequences to the their case. Contact us today if you need assistance with bankruptcy or winding-up applications in Hong Kong.
