RE LAM FUNG

RE LAM FUNG

Section 128(1) of the Bankruptcy Ordinance applies to funds referred to in Rule 122C(2)(j); unclaimed dividends (funds held for payment to creditors but not collected) falling within Rule 122C(2)(j) must be dealt with in accordance with s128(1). The statutory duty is mandatory and parties cannot contract out of it. A nominee may either retain unclaimed funds until the six-month threshold and then pay them to the Official Receiver, or pay them to the Official Receiver upon termination of the IVA to obtain discharge; proposals must reflect s128(1).

Citation
RE LAM FUNG
Parties
Applicant/debtor (hcbi 927/2002): Lam Fung; Applicant/debtor (hcbi 1142/2002): Hui Yau Yat; Respondent/official Receiver (appeared in HCBI 1142/2002): Official Receiver
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
28 January 2003
Case Number
HCBI927/2002
Procedural Posture
Bankruptcy Proceedings Interim Order Applications for Individual Voluntary Arrangements / Hearing on Interim Order Applications; Written Reasons Reserved and Handed Down
Outcome
Master Levy acceded to applicants' amended clauses that brought proposals into conformity with section 128(1); held that Rule 122C(2)(j) is governed by s128(1) and parties cannot contract out of s128(1). Reasons reserved and handed down.
Legal Topics
Individual Voluntary Arrangements (iva), Section 128(1) Applicability, Rule 122 C(2)(j) Unclaimed Funds, Nominee Obligations, Contracting Out of Statutory Duties, Official Receiver Powers
Source Language
EN
Bankruptcy Law Insolvency Statutory Interpretation Civil Procedure Individual Voluntary Arrangements (iva) Section 128(1) Applicability Rule 122 C(2)(j) Unclaimed Funds Nominee Obligations +2 more

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Parties

Lam Fung

Applicant/debtor (hcbi 927/2002)

Hui Yau Yat

Applicant/debtor (hcbi 1142/2002)

Official Receiver

Respondent/official Receiver (appeared in HCBI 1142/2002)

Procedural Posture

Bankruptcy Proceedings Interim Order Applications for Individual Voluntary Arrangements / Hearing on Interim Order Applications; Written Reasons Reserved and Handed Down

Legal Issues

  1. 1 Does section 128(1) of the Bankruptcy Ordinance apply to funds referred to in Rule 122C(2)(j) of the Bankruptcy Rules?
  2. 2 Can parties to an IVA contract out of the obligations imposed by section 128(1)?
  3. 3 When must a nominee pay unclaimed or undistributed funds to the Official Receiver and does termination of the IVA affect that obligation?

Ratio Decidendi

Section 128(1) of the Bankruptcy Ordinance applies to funds referred to in Rule 122C(2)(j); unclaimed dividends (funds held for payment to creditors but not collected) falling within Rule 122C(2)(j) must be dealt with in accordance with s128(1). The statutory duty is mandatory and parties cannot contract out of it. A nominee may either retain unclaimed funds until the six-month threshold and then pay them to the Official Receiver, or pay them to the Official Receiver upon termination of the IVA to obtain discharge; proposals must reflect s128(1).

Court Disposition

Master Levy acceded to applicants' amended clauses that brought proposals into conformity with section 128(1); held that Rule 122C(2)(j) is governed by s128(1) and parties cannot contract out of s128(1). Reasons reserved and handed down.

Orders

  • Amendments to IVA proposals in HCBI 927/2002 and HCBI 1142/2002 accepted to reflect compliance with section 128(1) of the Bankruptcy Ordinance
  • Rule 122C(2)(j) must be dealt with in proposals in accordance with section 128(1) (unclaimed dividends payable to Official Receiver when applicable)