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ARTICLE · 25 MAY 2010

Disclaiming Unprofitable Contracts by Liquidators in Hong Kong

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Under s.268 of the Hong Kong Companies Ordinance ("CO"), the Hong Kong Court has a discretion to grant leave to Liquidators to disclaim "onerous property" within a 12 month time limit (or such extended period as granted by the Court).

Hong KongFinance and Banking
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Article by Richard M. Tollan , Justine T.K. Lau and Kingsley Ong

Originally published 24 May 2010

Keywords: unprofitable contracts, liquidators, Hong Kong, onerous property, Lehman Brothers, LBCCA

Under s.268 of the Hong Kong Companies Ordinance ("CO"), the Hong Kong Court has a discretion to grant leave to Liquidators to disclaim "onerous property" within a 12 month time limit (or such extended period as granted by the Court). The categories of what "onerous property" might be disclaimed under s.268 CO includes "unprofitable contracts". Although s.268 CO has been a part of Hong Kong insolvency law since 1933, there is very limited Hong Kong authority on its application. Until now, there has been no clear Hong Kong authority on the application of s.268 CO insofar as "unprofitable contracts" are concerned.

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