Results of the Official Receiver’s Panel T Tender for Summary Liquidations

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It’s that time of the year again when the Hong Kong Administration announces the outcome of its latest tender for private-sector firms to undertake summary liquidations.

The results of the latest tender can be found here on the Official Receiver’s website.

The average tender price in 2010, the last time the tender was held, was HK$2,367 per case. The average price this time around has fallen to HK$1,768 per case.

Interestingly though, the tender provides for an estimated 800 liquidations during the two-year period. The Official Receiver has, in her written reply to a question asked by a Legco member, estimated that the number of liquidations in the next two years is likely to be 565. This compares with 770 actual liquidations during the last two calendar years. The significance of this is that one of the past arguments for being able to tender at such a low price was that it is cheaper to handle summary liquidations if they are dealt with in large numbers. However, the current projections point to much lower numbers of liquidations, thus negating the “volume” argument.

We believe that there is a certain basic level of work that has to be done on every case and that the current tender prices certainly don’t reflect the costs involved in undertaking that level of work.

The other argument for participating in the tender is that some liquidations are non-summary cases, i.e. have assets worth in excess of HK$200,000, resulting in liquidators being able to recoup a higher portion of their costs. However, the Official Receiver estimates that there will only be 18 such cases (on average two for each successful tenderer) in the next two years, which leaves somewhat limited opportunities to “gain on the swings what is lost on the roundabouts”.