Court of First Instance analyses the duty to have regard to creditor’s interests in corporate insolvency

On 30 November 2020, the Court of First Instance dismissed a claim against the former directors and a former indirect parent company of Wing Hong Construction Limited (in liquidation, “Listco“).  The claims against the defendants were for breaches of fiduciary duties, knowing receipt and caused preferential payments to be made by a subsidiary to the Listco at a time when the subsidiary was said to be insolvent or was of doubtful solvency.

In the course of its judgment, the Court examined in detail how a company may be said to be insolvent or was of doubtful solvency, and the extent to which directors of such a company should have regard to creditors’ interest as part of their fiduciary duties.

The Defendants were represented by Paul Lam SC leading Vincent Lung, instructed by Ince & Co.

The full judgment can be found here.