Disclaiming Unprofitable Contracts by Liquidators in Hong Kong
Originally published 24 May 2010
Keywords: unprofitable contracts, liquidators, Hong Kong,
Under s.268 of the Hong Kong Companies Ordinance ("CO"), the Hong Kong Court has a discretion to grant leave to Liquidators to disclaim "onerous property" within a 12 month time limit (or such extended period as granted by the Court). The categories of what "onerous property" might be disclaimed under s.268 CO includes "unprofitable contracts". Although s.268 CO has been a part of Hong Kong insolvency law since 1933, there is very limited Hong Kong authority on its application. Until now, there has been no clear Hong Kong authority on the application of s.268 CO insofar as "unprofitable contracts" are concerned.
In a High Court decision made on 19 May 2010, following an application made under s.268 CO by the Liquidators of Lehman Brothers Commercial Corporation Asia Limited (In Liquidation) ("LBCCA") to disclaim certain structured...
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