Full legislation
s.38
Priority of debts
(1)
In the distribution of the property of a bankrupt there shall be paid in
priority to all other
debts—
(a)
(Repealed
47 of 1984 s. 5
)
(b)
any—
(i)
payment from the Protection of Wages on Insolvency Fund under
section 18
of the Protection of Wages on Insolvency Ordinance
(
Cap. 380
) to any clerk or servant in
respect of wages or salary or both in respect of services rendered to the
bankrupt if such payment was made during a period of 4 months before the
date of the filing of the petition; and
(Amended
48 of 1987 s. 8
)
(ii)
wages and salary (including commission provided that the amount thereof
is fixed or ascertainable at the relevant date) of any clerk or servant in
respect of services rendered to the bankrupt during a
period—
(A)
beginning 4 months next before the date of the filing of the
petition and ending on the making of the bankruptcy order; or
(Amended
76 of 1996 s. 73
)
(B)
beginning 4 months next before the last day of service within the
meaning of
section 16(4)
of the Protection of Wages on
Insolvency Ordinance (
Cap. 380
) of any
clerk or servant who has made an application for an ex gratia payment
under
section 15(1)
of that Ordinance, and ending on that
last day of service,
(Replaced
68 of 1996 s. 4
)
whichever is the earlier, not exceeding, together with any payment
under
subparagraph
(i), $300;
(Replaced
12 of 1985 s. 29
(4). Amended
48 of 1987 s. 8
;
E.R. 1 of
2019
)
(c)
any—
(i)
payment from the Protection of Wages on Insolvency Fund under
section 18
of the Protection of Wages on Insolvency Ordinance
(
Cap. 380
) to any labourer or workman in
respect of wages, whether payable for time or for piece work, in respect of
services rendered to the bankrupt if such payment was made during a period
of 4 months before the date of the filing of the petition; and
(ii)
wages of any labourer or workman, whether payable for time or for piece
work, in respect of services rendered to the bankrupt during the
period—
(A)
beginning 4 months next before the date of the filing of the
petition and ending on the making of a bankruptcy order; or
(Amended
76 of 1996 s. 73
)
(B)
beginning 4 months next before the last day of service within the
meaning of
section 16(4)
of the Protection of Wages on
Insolvency Ordinance (
Cap. 380
) of any
labourer or workman who has made an application for an ex gratia payment
under
section 15(1)
of that Ordinance, and ending on that
last day of service,
(Replaced
68 of 1996 s. 4
)
whichever is the earlier, not exceeding, together with any payment
under
subparagraph
(i), $100;
(Replaced
12 of 1985 s. 29
(4). Amended
48 of 1987 s. 8
;
E.R. 1 of
2019
)
(ca)
any severance payment payable to an employee under the Employment Ordinance
(
Cap. 57
), not exceeding in respect of each
employee $6,000;
(Added
54 of 1974 s. 2
)
(caa)
any long service payment payable to an employee under the Employment
Ordinance (
Cap. 57
), not exceeding in respect of
each employee $8,000;
(Added
78 of 1985 s. 2
)
(cb)
any amount due in respect of compensation or liability for compensation
under the Employees’ Compensation Ordinance (
Cap.
282
) accrued before the date of the bankruptcy order and, where the
compensation is a periodical payment, the amount due in respect thereof shall be
taken to be the amount of the lump sum for which the periodical payment could,
if redeemable, be redeemed on an application being made for that purpose under
the Employees’ Compensation Ordinance (
Cap. 282
),
but this paragraph shall not apply to any amount due in respect of compensation
or liability for compensation where the bankrupt has entered into a contract
with a person carrying on accident insurance business in Hong Kong in respect of
his liability under the Employees’ Compensation Ordinance (
Cap. 282
) for personal injury by accident to the
employee to whom the compensation or liability for compensation is due;
(Added
5 of 1977 s. 2
. Amended
47 of 1984 s. 16
;
76 of 1996 s. 73
)
(cc)
any wages in lieu of notice payable to an employee under the Employment
Ordinance (
Cap. 57
), not exceeding in respect of
each employee one month’s wages or $2,000 whichever is the lesser;
(Added
5 of 1977 s. 2
)
(cd)
all accrued holiday remuneration becoming payable to any clerk, servant,
workman or labourer (or in the case of his death to any other person in his
right) on the termination of his employment before or as a consequence of the
bankruptcy order;
(Added
47 of 1984 s. 5
. Amended
76 of 1996 s. 73
)
(ce)
any payment from the Employees Compensation Assistance Fund under Part IV
of the Employees Compensation Assistance Ordinance
(
Cap. 365
) representing an amount
due by the bankrupt in respect of compensation or liability for compensation
under the Employees’ Compensation Ordinance (
Cap.
282
) accrued before the date of the bankruptcy order;
(Added
54 of 1991 s. 47
. Amended
76 of 1996 s. 73
)
(cf)
any amount of unpaid contribution or any amount deemed to be unpaid
contribution calculated in accordance with rules made under
section
73(1
)(
n)
of the Occupational Retirement Schemes Ordinance (
Cap. 426
) which should have been paid by the
bankrupt in accordance with the terms of an occupational retirement scheme
within the meaning of that Ordinance before the commencement of the
bankruptcy:
Provided that where such
amount exceeds $50,000 in respect of an employee, 50% of such part of the amount
that exceeds $50,000 shall not be paid in priority to all other debts under this
subsection;
(Added
88 of 1992 s. 83
)
(cg)
(without prejudice to any right or liability under a trust) any amount of
salaries deducted by the bankrupt from his employees’ salaries for the purpose
of making contributions in respect of such employees to the funds of an
occupational retirement scheme within the meaning of the Occupational Retirement
Schemes Ordinance (
Cap. 426
) which have not been
paid into such funds;
(Added
88 of 1992 s. 83
)
(ch)
any amount of unpaid contribution under, or any amount of unpaid
contribution calculated in accordance with, the Mandatory Provident Fund Schemes
Ordinance (
Cap. 485
) which should have been paid by
the bankrupt in accordance with the provisions of that Ordinance before the
commencement of the
bankruptcy:
Provided that where such
amount exceeds $50,000 in respect of an employee, 50% of such part of the amount
that exceeds $50,000 shall not be paid in priority to all other debts under this
subsection;
(Added
80 of 1995 s. 49
)
(ci)
any amount deducted by the bankrupt from the relevant income of his
relevant employees for the purpose of making contributions in respect of such
relevant employees to the approved trustee of a registered scheme within the
meaning of the Mandatory Provident Fund Schemes Ordinance (
Cap. 485
) which have not been paid to that approved
trustee;
(Added
80 of 1995 s. 49
)
(cj)
any sum and interest thereon payable to the Mandatory Provident Fund
Schemes Authority under
section 17(7)
of the Mandatory Provident Fund
Schemes Ordinance (
Cap. 485
);
(Added
80 of 1995 s. 49
)
(d)
all statutory debts due from the bankrupt to the
Government
at the date of the bankruptcy order and which became due and payable within 12
months next before that date.
(Replaced
47 of 1984 s. 5
. Amended
76 of 1996 s. 73
;
22 of 2023 s. 85
)
(2)-(2A)
(Repealed
76 of 1996 s. 28
)
(2B)
Where—
(a)
the date of the receiving order is on or after 1 April 1977; or
(b)
a bankruptcy order is made on or after the day the Bankruptcy (Amendment)
Ordinance 1996 (
76 of 1996
) comes into
operation,
the sum of $8,000 shall be deemed to be substituted in each case for the sums
of $300 and $100 referred to in paragraphs (b) and (c) respectively, and for the sum
of $6,000 referred to in paragraph (ca), of subsection (1).
(Added
5 of 1977 s. 2
. Amended
76 of 1996 s. 28
)
(3)
The debts specified in subsection
(1
)(
b)
, (c), (ca), (caa), (cb),
(cc), (cd), (ce), (cf), (cg), (ch), (ci) and (cj
)—
(Amended
47 of 1984 s. 5
;
78 of 1985 s. 2
;
54 of 1991 s. 47
;
88 of 1992 s. 83
;
80 of 1995 s. 49
)
(a)
shall have priority over the debts specified in subsection
(1
)(
d)
;
(b)
shall rank equally among themselves; and
(c)
shall be paid in full unless the property of the bankrupt is insufficient
to meet them, in which case they shall abate in equal proportions among
themselves.
(Replaced
42 of 1970 s. 2
. Amended
54 of 1974 s. 2
;
5 of 1977 s. 2
)
(3A)
(Repealed
47 of 1984 s. 5
)
(4)
Subject to the provisions contained in
section 37
and to the
retention of such sums as may be necessary for the costs of administration or
otherwise, the foregoing debts shall be discharged forthwith so far as the property
of the debtor is sufficient to meet them.
(5)
In the event of a landlord or other person distraining or having distrained on
any goods or effects of a bankrupt within 3 months next before the date of the
bankruptcy order the debts to which priority is given by this section shall be a
first charge on the goods or effects so distrained on or the proceeds of the sale
thereof.
(Amended
42 of 1970 s. 2
;
76 of 1996 s. 73
)
(5A)
Any money paid under a charge under subsection (5) shall be a debt due from the
estate of the bankrupt to the landlord or other person distraining or having
distrained, and such debt shall be discharged so far as the property of the bankrupt
is sufficient to meet it after payment of the debts specified in subsection (1) but
before payment of the other debts proved in the bankruptcy.
(Added
42 of 1970 s. 2
)
(5B)
Where any assets have been recovered under an indemnity for costs of litigation
given by certain creditors, or have been protected or preserved by the payment of
moneys or the giving of indemnity by creditors, or where expenses in relation to
which a creditor has indemnified a trustee have been recovered, the court may, on
the application of the Official Receiver or the trustee or any such creditor, make
such order as it deems just with respect to the distribution of those assets and the
amount of those expenses so recovered with a view to giving those creditors an
advantage over others in consideration of the risk run by them in so doing.
(Added
47 of 1984 s. 5
)
(5C)
Any remuneration in respect of a period of holiday or of absence from work
through sickness or other good cause shall be deemed to be wages in respect of
services rendered to the bankrupt during that period.
(Added
47 of 1984 s. 5
)
(6)
This section shall apply in the case of a deceased person who dies insolvent as
if he were a bankrupt and as if the date of his death were substituted for the date
of the bankruptcy order.
(Amended
76 of 1996 s. 73
)
(7)
In the case of partners the joint estate shall be applicable in the first
instance in payment of their joint debts and the separate estate of each partner
shall be applicable in the first instance in payment of his separate debts. If there
is a surplus of the separate estates, it shall be dealt with as part of the joint
estate. If there is a surplus of the joint estate, it shall be dealt with as part of
the respective separate estates in proportion to the right and interest of each
partner in the joint estate.
(See
Rule 195
)
(8)
Subject to the provisions of this Ordinance, all debts proved in the bankruptcy
shall be paid pari passu.
(9)
If there is any surplus after payment of the foregoing debts, it shall be
applied in payment of interest from the date of the bankruptcy order at the rate
specified in
section 71(3)
on all debts proved in the bankruptcy.
(Amended
76 of 1996 ss. 28
& 73)
(10)
In this
section—
accrued holiday remuneration
(
累算的假日薪酬
) includes, in relation to any person, all
sums which, by virtue either of his contract of employment or of any enactment
(including any order made or direction given under any Ordinance), are payable on
account of the remuneration which would, in the ordinary course, have become payable
to him in respect of a period of holiday had his employment with the bankrupt
continued until he became entitled to be allowed the holiday, and, without
limitation, includes any pay for untaken statutory holidays and pay for untaken
annual leave;
(Amended
7 of 2012 s. 9
)
Employees Compensation Assistance
Fund
(
僱員補償援助基金
) means the fund
established by
section 7
of the Employees Compensation Assistance
Ordinance
(
Cap. 365
);
(Added
54 of 1991 s. 47
)
pay for untaken annual leave
(
未放年假薪酬
), in relation to any person, means any sum which, by virtue
either of the person’s contract of employment or of any enactment (including any
order made or direction given under any Ordinance), is
payable—
(a)
in respect of annual leave to which the person has become entitled to
be allowed but which the person has not taken; or
(b)
on account of the remuneration in respect of annual leave that would
have become payable to the person if the person’s employment had continued
until the person became entitled to be allowed the annual leave,
and, without limitation, includes any sum payable under
section
41D
of the Employment Ordinance (
Cap.
57
);
(Added
7 of 2012 s. 9
)
pay for untaken statutory
holidays
(
未放法定假日薪酬
) means any sum
payable under the Employment Ordinance (
Cap. 57
) or a
contract of employment in respect of a statutory holiday (within the meaning of that
Ordinance) that has not been taken as a holiday (within the meaning of that
Ordinance);
(Added
7 of 2012 s. 9
)
Protection of Wages on Insolvency
Fund
(
破產欠薪保障基金
) means the fund deemed
to be established and continued in existence under
section 6
of the
Protection of Wages on Insolvency Ordinance (
Cap.
380
);
(Added
12 of 1985 s. 29
(4))
statutory debt
(
法定債項
) means a debt the liability for which and the amount of which are
determined by or under any provision in any Ordinance;
(Amended
18 of 2005 s. 12
)
wages
(
工資
) includes,
in relation to any person, any sum which, by virtue of his contract of employment,
is payable to him as a Lunar New Year bonus, but does not include any accrued
holiday remuneration.
(Replaced
47 of 1984 s. 5
)
(11)
The Bankruptcy (Amendment) Ordinance 1984 (
47 of
1984
) shall not apply in the case of a bankruptcy where the date of the
receiving order occurred before the commencement* of that Ordinance, and, in such a
case, the provisions relating to priority of debts which would have applied if that
Ordinance had not been enacted shall be deemed to remain in full force.
(Added
47 of 1984 s. 5
)
(12)
The
Fifth Schedule
to the Protection of Wages on Insolvency
Ordinance
(
Cap. 380
) shall not apply in the case
of a bankruptcy where the date of the filing of a petition occurred before the
commencement**
of that Ordinance, and, in such case, the provisions relating to priority of debts
which would have applied if that Ordinance has not been enacted shall
be
deemed to remain in full force.
(Added
12 of 1985 s. 29
(4))
(13)
Section 4(a)
and (b) of the Protection of Wages on Insolvency
(Amendment) Ordinance 1996 (
68 of 1996
) (
the
amending Ordinance
) shall not apply in the case of a bankruptcy to
which an application under
section 15(1)
of the Protection of Wages on
Insolvency Ordinance (
Cap. 380
) relates where such
application is made before the
commencement
§
of the amending Ordinance, and, in such case, the provisions relating to priority of
debts which would have applied if the amending Ordinance had not been enacted shall
be deemed to remain in full force.
(Added
68 of 1996 s. 4
)
[cf. 1914 c. 59 s. 33 U.K.]