bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Jane Moir

A controversial corporate rescue bill is to be re-introduced into the Legislative Council in May or June next year, according to financial chiefs.

The Financial Services Bureau (FSB) yesterday denied that the provisional supervision proposals had been put on the shelf, dismissing fears that the bill is a low priority of the Government.

A slot has been booked for an initial reading of the proposals in May, although it may be postponed by a month. The legislative session ends in June.

There has been no estimate of how long it will take for the bill to become law.

The proposals - to give struggling companies breathing space of at least 30 days to work out a restructuring - have been slated by insolvency practitioners as unworkable in their present form.

This is because the bill stipulates that a firm must initially pay off employees and former employees before it goes into provisional supervision, a move seen as a hindrance to companies struggling to find money to stay afloat.

Meetings will take place between FSB, the labour advisory board and representatives from the Protection of Wages on Insolvency Fund (PWIF) over the next few months.

A paper will then be presented to the financial services panel and will subsequently appear in Legco in May or June next year, according to the FSB.

The bureau, however, declined an invitation to a brainstorming session with academics, liquidators and lawyers yesterday on a proposed alternative version of the bill.

A symposium was organised by companies law experts from Hong Kong University to debate potential antidotes to the thorny issue of employees' compensation under provisional supervision.

Although an invitation was sent to the FSB, it decided to send a representative from the Official Receiver's Office rather than its own. The Official Receiver's Office had also been invited to attend separately.

The representative would present a report to both the Financial Services Bureau and the official receiver, an FSB spokesman said.

A proposal has been devised by Hong Kong University's Philip Smart and Charles Booth to tackle the problem of treatment of employees under the corporate rescue bill.

The pair suggest that any future legislation should contain a new concept of 'employees' protected debts', which would track the amounts which may presently be claimed from the PWIF.

Any voluntary arrangement proposal must stipulate that any outstanding employees' protected debts would be satisfied in cash upon the arrangement coming into effect.

In this case, the legislation should state that the 30-day moratorium period should not be extended unless a provisional supervisor undertook that these debts be paid off or the court was satisfied other arrangements had been made to ensure employees were protected.

The present approach embodied in the bill does not involve any kind of renumeration from the PWIF.

Liquidators point out, however, that a company considering provisional supervision would be at a disadvantage if it had to pay off its workers before arriving at a restructuring proposal.



Bureau denies putting disputed corporate rescue bill on shelf