If there is a debt problem, the average person will recommend “debt restructuring”, but if there is really no other way, “bankruptcy” can be said to be the remaining way out. As a legal process, an applicant’s post-bankruptcy repercussions will be multi-faceted, with a particularly far-reaching legacy of credit history. Besides, what is left after the bankruptcy order is discharged? Is there any difficulty in opening a company bank account and opening a company?
How will debts be arranged after bankruptcy?
Once someone is in financial crisis and needs to apply for bankruptcy, after the bankruptcy procedure, the applicant will be issued a bankruptcy order by the court.
According to Hong Kong company law, bankruptcy does not mean liquidating all debts and closing the case. All assets of the bankrupt will be collected and realised by the agency or the trustee, and used to apportion to creditors to repay debts, provided that the “reasonable needs” of the bankrupt and his family are considered, that is, the bankrupt’s food, clothing, housing, education, medical care , income tax expenses and MPF contributions.
If the bankrupt holds the property, the property will be realised; if it is a joint property, the bankrupt’s interest will also be taken over and realised by the trustee.
To prevent someone from “bankrupt” to avoid debts, the applicant must not have the following transactions with other creditors, spouses, relatives or partners within five years before the bankruptcy petition：
- transactions undervalue
- unfair preference
Otherwise, the Bankruptcy Officer may apply for the recovery of such assets.
When can a bankruptcy order be discharged?
The bankruptcy period is directly related to the bankrupt’s past behavior. If he has never been adjudicated bankrupt by the Bankruptcy Ordinance before, and can live in accordance with the provisions and conditions, and if neither creditors nor the court have raised valid objections, basically the bankruptcy order will be automatically cancel after 4 years from the date of issuance.
However, if it is not the first time the bankrupt is adjudged bankrupt, the relevant bankruptcy order term will be reduced to 5 years.
In addition, in the event that the bankrupt’s conduct is not satisfactory, the creditors can raise valid reasons to object to the discharge of the bankruptcy order. This has the opportunity to extend the bankruptcy period by up to four years (or up to three years if the bankrupt has been adjudicated bankrupt).
Can open a company after bankruptcy?
If the person intends to open a company after the bankruptcy order is discharged, whether it is a limited company or an unlimited company, he can go through the relevant procedures and even serve as the company’s management, including serving as a director.
Can open a company bank account after bankruptcy?
Judging from the current cases, banks generally do not reject companies who have been bankrupt or who have applied for or on their behalf to open bank accounts. However, the bank usually needs to check the certificate of discharge of bankruptcy order, and the rules of individual banks may be slightly different, which requires the applicant to reconfirm.
The above information is for reference only. If you have any questions about tax declaration and accounting, we welcome your inquiries.