A. Brief introduction of bankruptcy proceedings
When debtors (or bankrupts) fail to repay their debts and the Court has granted bankruptcy orders against them, the debtors’ assets are collected and realised (sold off and converted to cash) by a neutral person (known as the “Trustee”). This Trustee can be the Official Receiver, who is employed by the Official Receiver’s Office. The proceeds from the realisation are then distributed to the creditors (persons who are owed money by the debtors) for repaying the relevant debts or part of the debts.
During the effective period of the bankruptcy order, part of the debtor’s earnings is utilised for repayment. The Court also investigates the causes of bankruptcy and may punish the bankrupt if any provision in the Bankruptcy Ordinance (Cap. 6 of the Laws of Hong Kong) has been breached.
The debtor in bankruptcy proceedings can be an individual person or several persons (e.g. a partnership), excluding limited companies. When the bankruptcy order is discharged, the debtor is free from the monetary liabilities that were incurred before bankrupt.
Generally speaking, a bankruptcy case will undergo the following stages:
Issuing a statutory demand for debt repayment to the debtor (if applicable)
Presenting a bankruptcy petition to the Court, to the Official Receiver's Office and to the debtor
Granting of bankruptcy order by the Court
The debtor's assets are collected and realised by the Trustee/Official Receiver
Distributing the relevant proceeds and part of the debtor's income to the creditors
Discharge of bankruptcy order