Workers' rights key for legislators in weighing up Hong Kong bankruptcy bill
Employee protection will be a key consideration for lawmakers deciding whether to support the introduction of US-style Chapter 11 bankruptcy legislation in Hong Kong, the South China Morning Post has been told.
The law change proposal, one of the items to be discussed by lawmakers at today's monthly financial affairs panel meeting, would introduce a corporate rescue procedure allowing troubled companies at least six months to find white knights instead of being forced to go into liquidation immediately.
The government plans to introduce the bill before the current Legislative Council's term expires in June 2016. Government officials will brief lawmakers on the proposal today.
"We will only support Hong Kong introducing corporate rescue legislation if the government makes sure employees' interests will be protected during the process," legislator Chan Kam-lam said.
"We will not support any law change that would damage the interests of the millions of employees in the city."
Chan said lawmakers would also focus on whether the proposed change would make it easier for troubled companies to merge with or be taken over by other companies.
Legislator Sin Chung-kai said he would support a change in the law if employees would receive proper pay during the restructuring process.
Derek Lai, the Asia-Pacific leader of restructuring services at Deloitte Touche Tohmatsu, said Chapter 11 was important because it gave companies sufficient time to restructure their debts and find new investors to inject capital.
"This is much better than in Hong Kong, where many companies go into bankruptcy once they can't repay their debts and the employees lose their jobs," Lai said.
It has taken almost two decades for the city to formulate the new legislation, after it was initially suggested by the Law Reform Commission in 1996.