5. If a bankruptcy order is granted against Mr. T, then what will happen to Mr. T?
When a bankruptcy order has been granted against Mr. T, no other legal proceedings can be taken or proceeded with against the him or his assets without the permission of the Court. The bankruptcy order will be advertised by the Official Receiver in the Gazette and two newspapers (one in Chinese and one in English).
Mr. T should attend the Official Receiver's Office for an interview about his current financial status and the future arrangement of his assets. He should also submit a Statement of Affairs (a document that includes the details of his financial status and all of his current liabilities) to the Official Receiver. He may also be required to attend all subsequent meetings with his creditors, the Official Receiver and the Trustee regarding the future arrangement of his assets and repayment procedures.
Mr. T should not make repayments directly to individual creditors, including ABC Bank without the approval of the Court and the Official Receiver. He should stop using credit cards or apply for loans from financial institutions. He should also cease payment of any life insurance premium. He cannot enjoy luxuries such as buying a car or travelling by taxi unless he has reasonable grounds to do so.
The Official Receiver/Trustee will take control of Mr. T's assets and income. The Trustee or the representative of the Official Receiver has the right to inspect Mr. T's house if necessary. His provident fund (if any) will be considered as part of his assets (subject to the provisions of the relevant provident fund scheme).
Mr. T should hand over all of his assets (both local and overseas) to the Official Receiver/Trustee and submit all documents related to his assets such as bank account statements or the account books of his business, etc. He should also inform the Official Receiver/Trustee of all of his income/earnings.
If Mr. T owns a flat under the joint name of his wife, then his share may be realised for the repayment of his debts. If he owns any property outside of Hong Kong, then the Official Receiver/Trustee will require him to sell that property for the benefit of the creditors and to sign all necessary authorities, deeds and documents for such purpose. If Mr. T refuses to do so, then he may be punished for contempt of court.
After the deduction of administrative expenses and reasonable living expenses for Mr. T and his family, the Official Receiver/Trustee will distribute Mr. T's assets (including his current income) to his creditors by way of dividends. However, Mr. T's family members will not be required to bear his indebtedness.
With regard to the matter of reasonable living expenses as mentioned above, the High Court has made the following ruling (as per the case of Re Lau Nga Yee Christine):
- A person's "reasonable domestic needs" should be the same whatever the size of his debt. The mere fact that a large amount is due cannot somehow make a basic need less reasonable.
- In principle the education of one's children can constitute a "domestic need" of the bankrupt and her family. The expense is "domestic" in the sense that the education of sons and daughters is a conventional incident of maintaining a family and home. It is a "need" in the sense that, especially in Hong Kong, the education (including the tertiary education) of one's offspring is regarded as an important parental and social responsibility, irrespective of any obligations imposed by the letter of the law.
- In view of the bankrupt's genuine need to support her family, together with the special nature of her job, the Court (in the subject case) also allowed reasonable expenses in the following areas:
- expenses of a part-time domestic helper;
- emergency taxi fare (to deal with emergency duty calls from her employer, i.e. Hospital Authority);
- support for the bankrupt's parents (both nearly 80 years old, whilst the bankrupt's 2 siblings were also in financial difficulties);
- job-related expenses.