Hong Kong's consultation paper on a rescue regime for
distressed companies seems to be poorly thought out. The paper
has not resolved several problematic proposals from 2001's bill
particularly regarding the treatment of employees.
Lawyers are relieved that the government has shelved 2001's
plan to extend liability for insolvent trading from directors
to senior management. The new proposals also remove liability
for trading when there was a "suspicion" that the company was
But some feel that despite more than 10 years of
consideration the process has not moved much beyond the 2001
bill. Key issues, such as the preferential treatment of
employees, remain. "Employees are the big problem with these
proposals. They were the problem previously and they remain so
today," says Neil McDonald of Lovells.
Bruce Cooper of Freshfields Bruckhaus Deringer argues:
"These proposals are not fantastically new and improved over
the 2001 proposals...