(Hong Kong, 2 April 2020) The ongoing COVID-19 pandemic is hitting Hong Kong with the full force of its health and economic effects. The Hong Kong Institute of Certified Public Accountants (“HKICPA”) believes that the community needs to take precautions to mitigate the risk of financial distress. With this in mind, the HKICPA’s Restructuring and Insolvency Faculty Executive Committee (“RIFEC”) has published quick guidance, “How to manage financial distress”, giving important information to businesses and individuals, and its members who advise them, on dealing with their difficulties.

As the courts have been operating on a more restricted basis over the past several weeks, statistics from the Official Receiver's Office (“ORO”) on corporate winding up and bankruptcy petitions, interim orders made, and individual voluntary arrangements entered into may not yet reflect the full picture of the economic situation. The government meanwhile is predicting that things will get worse before they get better. 

 “The impact of the current situation in Hong Kong is likely to be worse than during SARS (Severe Acute Respiratory Syndrome) in 2003, which was relatively short-lived. Economic activities started to weaken significantly from the second half of 2019 due to the international trade tensions and the local social unrest, and now the COVID-19 pandemic has exacerbated the problems. The uncertainties in the global and domestic environments have heightened the challenges for Hong Kong’s economy,” said Mr. Johnson Kong, President of HKICPA.

“Given the deteriorating economic outlook, directors, business owners, employees and members of the public should take steps to prepare themselves for all possible financial eventualities.

“We believe that, in the present climate, it is important to raise awareness of, and consolidate, this key information and advice for members of the public and businesses, as well as our own members. This is why we have taken the initiative to publish this material in a quick guide,” Mr. Kong continued. “The HKICPA can help as its Restructuring and Insolvency Faculty is the main forum for professionals in this field, in Hong Kong”, he added. 

There are various options, including debt relief measures, available in the market both for companies and individuals to mitigate the risk of corporate or personal insolvency. In circumstances where companies are unable to meet their financial obligations, even though their business is viable, directors are encouraged to explore restructuring options that may rehabilitate and safeguard the interests of stakeholders, creditors, employees and others, as early as possible. Companies with bank loans facing short­term cash flow constraints and difficulties servicing their debts should consider talking to their lenders. Many banks are prepared to discuss debt-restructuring possibilities. In these difficult times, some landlords may also be willing to talk to tenants and make specific arrangements in relation to rental payments. Some industries and small and medium size business may be eligible for government financial assistance and relief measures, recently introduced or enhanced, to help businesses to weather the storm.

Employees losing their jobs due to redundancy could easily face personal financial hardship and mounting debts. Individuals owing money to banks, including credit card debts, and unable to make their payments on time, should contact their banks, as banks are often willing to consider adjusting repayment schedules, as an alternative to bankruptcy. “There are also debt counselling services offered by non-government organisations in Hong Kong, and statutory arrangements, called individual voluntary arrangements, which may be preferable to declaring bankruptcy,” said Mr Terry Kan, RIFEC Chairman. 
Where other options are really not tenable, companies and individuals should avail themselves of the statutory winding up and bankruptcy procedures, and ensure that they are aware of their obligations under the law, including an employer’s obligations to pay wages on time. Employees should also be aware of their rights. Relevant information can be found on the websites of the Official Receiver’s Office and the Labour Department.

On a note of caution, debtors may also be approached by financial intermediaries offering “informal” debt restructuring arrangements, which often involve taking out further loans negotiated by the intermediaries to pay off existing debts. Debtors should think very carefully before being induced to enter into such arrangements because, in practice, they may merely defer bankruptcy and the debtor may end up owing a larger debt.

For more details of “How to manage financial distress”, please visit
http://app1.hkicpa.org.hk/correspondence/communication/2020/03-24/RIF_Advice.pdf

香港會計師公會編製參考小冊子 助企業及個人應對財務危機

（香港，二零二零年四月二日）新型冠狀病毒疫情持續，對香港公共健康及經濟造成重大衝擊。香港會計師公會認為社會各界應及早採取預防措施，減低陷入財困的風險。為此，公會的重整及破產管理專項學會執行委員會編製了《應對財務危機》小冊子，當中載有助企業及個人應對財務困難的重要資訊及執行委員會會員提供的忠告。

由於法院的運作在過去數周受阻，破產管理署現時有關公司清盤及個人破產呈請、臨時命令及個人自願安排的統計數字，或尚未反映經濟實況，而政府亦預測市況在復甦之前將變得更惡劣。

香港會計師公會會長江智蛟先生表示：「目前逆境對香港造成的影響很可能較二零零三年沙士時期嚴重，當時疫情持續的時間較短。受到國際貿易關係緊張及社會動盪的影響，經濟活動自二零一九年下半年起已明顯轉弱，最近的新型冠狀病毒疫情令經濟狀況雪上加霜。國際及本地不明朗因素亦加劇對香港經濟環境的挑戰。」

「面對經濟前景轉差，董事、企業東主、僱員及公眾人士皆應作好準備，應對可能面對的財務困境。」

江先生補充說：「面對當前市況，公會認為提高公眾、企業及會員的危機意識，並為他們整合重要資訊及提供建議十分重要，因此主動製作了這份小冊子。我們的重整及破產管理專項學會作為行業的主要團體，匯聚了這領域多數的專業人士，隨時能夠為此提供協助。」

市場上有各種為企業及個人而設的方案，當中包括債務寬免計劃，有助減低企業或個人破產風險。若企業可維持業務但無法履行其財務責任，董事應尋求重整方案，以儘早恢復及保障持份者、債權人、僱員及其他人士的利益。有銀行貸款的企業，若因短期現金流壓力而面對還款困難，應考慮與其貸款銀行商談。事實上不少銀行已準備與其貸款客戶商討重整債務方案。正值市道不景氣，部份業主亦可能願意與租戶討論特定的租務安排。另外，政府最近推出及提升了一些協助商界渡過難關的財務援助及紓困措施，合資格的行業及中小型企業可考慮申領。

因裁員而失業的人士很可能會面臨財務困境及背負更多債務。若個人未能如期償還銀行債務（包括信用卡欠款），應與銀行商討，銀行通常願意調整還款期，以免欠債人破產。公會重整及破產管理專項學會執行委員會主席簡立祈先生說：「本港有一些非政府組織提供債務輔導服務，而香港亦設有稱為『個人自願安排』的法定程序，在選擇破產前可先考慮這些方案。」

若真的別無他法，企業及個人應進行法定清盤及個人破產程序，同時亦要清楚知悉其法定責任，包括僱主須按時支付工資，而僱員亦應了解其法律權利。破產管理署及勞工處的網站載有相關資料可供參閱。

值得留意的是，一些財務中介機構或會建議債務人使用「非正式」的債務重整安排來解決債務問題，當中通常涉及以中介機構協商的新貸款來償還現有債務。債務人在被遊說訂立此類安排前務須考慮清楚。實際上這種安排可能只會令債務人延遲破產，最終背負更多債務。

《應對財務危機》小冊子全文，請參閱：
http://app1.hkicpa.org.hk/correspondence/communication/2020/03-24/RIF_Advice_c.pdf