You might remember in early 2009 the fanfare that greeted the government’s proposals to re-introduce Provisional Supervision.
Well, we are now over two years down the road, with a lengthy consultation period behind us, only to find that the bill will not now be going before Legco for the present session that ends in mid-2012.
Is that the bad news or the good news?
On the one hand it’s very disappointing that all the work that many people in Hong Kong have put into the consultation process is not going to come to fruition, at least certainly not in the short term. This includes those in the Civil Service tasked with the review and those in the profession who gave freely of their time as part of the review. Indeed, this will be seen by some as justification for their original view that Provisional Supervision was never going to make the statute book.
The alternative view is that this provides an opportunity to include some form of corporate rescue procedure, although not necessarily in the exact same format as Provisional Supervision, as part of the comprehensive ongoing review of the insolvency provisions of the Companies Ordinance.
There was always a danger of inconsistencies creeping into the insolvency process when faced with a piece of legislation (Provisional Supervision) drafted almost 15 years ago co-existing with the winding-up provisions of the Companies Ordinance in either their existing format (many of which date back to 1929!!), or the new provisions that are being considered.
There is now an opportunity to design a seamless system that will serve Hong Kong for many years into the future.