Remuneration of Provisional Liquidators & Liquidators under the Offical Receiver’s Contracting-out Schemes

Abstract

The Official Receiver of Hong Kong operates two schemes known commonly as the Panel A and Panel T Schemes for the purposes of contracting-out its workload. There was a Panel B Scheme but it has now ceased to operate. It is expected, as a result of the economic impact of the current global financial crisis, that the number of court winding-up cases will continue to rise, and therefore it is imperative to streamline the practices of private-sector provisional liquidators and liquidators and the payment schemes under which they are paid. This article first identifies the different circumstances that call for the appointment of private insolvency practitioners to act as liquidators under the Panel A Scheme, and as provisional liquidators and / or liquidators under the Panel T Scheme. Then, this article will examine whether the percentage basis or the time-cost basis shall be used as the default to determine their fees and remuneration. Finally, the shortfall met out by the government subsidy is available currently for the Panel T Scheme only, not the Panel A Scheme. Whether such subsidy should be removed by cross-subsidising Panel A and Panel T Scheme cases or whether a “cab rank” system should be introduced will also be examined.