In re INTER TRANS FAR EAST LTD.

In re INTER TRANS FAR EAST LTD.

Under s.265(5B) a court may grant a creditor who indemnifies the liquidator a preferential share above pari passu where the indemnity and efforts materially contribute to recovery; the discretion must be exercised strictly, matching reward to risk/expense and, where practicable, offering other creditors the opportunity to indemnify; applying these principles, a 15% indemnity was reasonable on the facts.

Citation
In re INTER TRANS FAR EAST LTD.
Parties
Applicant (liquidator): Official Receiver; Company in Liquidation: Inter Trans Far East Limited; Creditor (indemnifier): Gondrand S.N.T. s.p.a.; Former Director (unnamed): Former Director
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
28 December 1993
Case Number
HCCW195/1986
Procedural Posture
Companies Winding Up (application Under S.265(5 B) Companies Ordinance) / Application Heard; Reasons for Ruling Delivered
Outcome
Order granted to approve a 15% preferential distribution to Gondrand S.N.T. s.p.a.
Legal Topics
Distribution of Assets, Indemnity to Liquidator, Pari Passu Exception, Priority Among Creditors
Source Language
EN
Company Law Insolvency Bankruptcy Distribution of Assets Indemnity to Liquidator Pari Passu Exception Priority Among Creditors

Case Brief

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Parties

Official Receiver

Applicant (liquidator)

Inter Trans Far East Limited

Company in Liquidation

Gondrand S.N.T. s.p.a.

Creditor (indemnifier)

Former Director

Former Director (unnamed)

Procedural Posture

Companies Winding Up (application Under S.265(5 B) Companies Ordinance) / Application Heard; Reasons for Ruling Delivered

Legal Issues

  1. 1 Whether s.265(5B) permits a creditor who indemnifies a liquidator to receive more than a pari passu share
  2. 2 How the court should exercise its discretion under s.265(5B) and the principles guiding quantum of advantage
  3. 3 Whether other creditors should be offered opportunity to indemnify

Ratio Decidendi

Under s.265(5B) a court may grant a creditor who indemnifies the liquidator a preferential share above pari passu where the indemnity and efforts materially contribute to recovery; the discretion must be exercised strictly, matching reward to risk/expense and, where practicable, offering other creditors the opportunity to indemnify; applying these principles, a 15% indemnity was reasonable on the facts.

Court Disposition

Order granted to approve a 15% preferential distribution to Gondrand S.N.T. s.p.a.

Orders

  • Gondrand S.N.T. s.p.a. to receive 15% preferential distribution of the amount recovered (approximately HK$305,831.50) after deduction of the Official Receiver's usual fees
  • Indemnity fixed at 15% in respect of the recovered sum