The Bankruptcy (Amendment) Ordinance (the “Ordinance”) was passed in April in response to certain provisions in the Bankruptcy Ordinance being struck down as unconstitutional. The Ordinance comes into effect from 1 November 2016 and will affect all bankruptcy orders made after that date.
The present regime
The current bankruptcy regime provides for automatic discharge of bankruptcy and the required period of time varies among first time and repeat bankrupts, subject to, among other things, a regime that allows the deferral of the automatic discharge if bankrupts leave Hong Kong.
If a bankrupt (i) leaves Hong Kong before the commencement of bankruptcy; (ii) leaves Hong Kong after the commencement of bankruptcy, and without notifying the trustee of their itinerary and contact details or (iii) failing to return to Hong Kong after bankruptcy has started, the running of time required for automatic discharge will be suspended until the bankrupt returns to Hong Kong and he notifies the trustee in bankruptcy of the return.
The NEW regime
The new regime, providing for the non-commencement order, will displace the current regime.
The system of “initial interview” is introduced. It is intended to increase the transparency of the bankrupt’s estate and hence allow a more efficient administration of the estate. A trustee can request the bankrupt to attend in person the initial interview with the view of obtaining information of their financial affairs, dealings and property in Hong Kong. If the bankrupt fails to comply and the administration of the estate is hence prejudiced, the trustee can apply to the Court for an order (with conditions as the Court thinks fit) to treat the relevant period for automatic discharge as not commencing to run. The order can be applied within 6 months of the date of the bankruptcy order. The accrual of time will not commence until the order is discharged and all conditions are complied with. The bankrupt can object to the application.
Once the bankrupt has complied with the order, the trustee in the estate must notify the Court within14 days and time for the automatic discharge will start to run from the date of actual compliance.
This is a very welcomed move forward in improving on the current bankruptcy regime. The new regime can provide disincentive to bankrupts from deliberate non-cooperation with the trustee or absconding, and also allow the trustee to obtain more relevant information on the outset in the administration of the estate.