MACAU SAR, CHINA Law and Practice Contributed by: Calvin Tinlop Chui and Carla Veiga, Lektou
any action that may reduce their assets or alter the situation of the creditors.
note that the right of set-off, offset or netting may be temporarily suspended or terminated in certain situations. For example, set-off rights may be sus - pended or terminated if the debtor has obtained a court order for a moratorium or has committed fraudulent acts to avoid payment. In addition, if the set-off would result in unfair treatment of other creditors or is contrary to public policy, the court may limit or deny the set-off. 5. Statutory Insolvency and Liquidation Procedures 5.1 The Different Types of Liquidation Procedure The debtor has the duty to present themself to the court within 15 days of failing to pay one or more debts that, considering the amount due and the cir - cumstances in which default took place, evidence their incapacity to pay their debts as they fall due. Under Macau law, creditors and the Public Prosecu - tor’s Department, which represents the interests it is bound to protect, have the right to legitimately file a petition with the court for the declaration of a mer - chant’s bankruptcy. The applicant must submit a plea to the court, detail - ing the following: • the grounds for the application; • the source, type and value of their credits; • an assessment of whether filing for bankruptcy would be appropriate before hearing from the debtor; and • all pertinent evidence and any extra proof needed to bolster their plea. 5.2 Course of the Liquidation Procedure Bankruptcy may be initiated by the debtor, any credi - tor, or the public prosecutor, supported by documen - tary evidence of insolvency. A creditor’s petition must set out the claim’s origin, nature, and amount, indicate whether immediate adjudication without hearing the debtor is warranted, and, for corporate debtors, iden - tify any shareholders with unlimited liability. A debtor’s petition must:
4.5 The Position of Office Holders in Restructuring, Rehabilitation and Reorganisation
Once the bankruptcy proceedings have been filed, the court appoints the bankruptcy administrator, who helps and supervises the debtor both in running the business as well as managing the debtor’s other assets. Bankruptcy administrators can propose to the court any measures they think fit to prevent any act that might turn out to be detrimental to creditors’ inter - ests, mainly to prevent asset stripping. 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and Reorganisation The creditors are actively involved in all preventative measures, by participating in negotiations on the con - cordata with the debtor or by submitting the concor - data or creditors’ agreement to the court. The value of each claim is determined in the list of creditors pre - pared by the bankruptcy administrator, which may be challenged by the creditors. In Macau, a creditor may exercise the right of set-off, offset or netting if the following conditions are met. • Reciprocal Debts: There must be a mutual and reciprocal debt relationship between the creditor and the debtor. This means that the creditor must have a claim against the debtor that is of the same nature as the creditor’s claim against the debtor. • Pre-Existing Debts: The debts subject to set-off, deduction or netting must have existed prior to the opening of the insolvency proceedings. As a general rule, debts arising after the opening of the proceedings cannot be set off. • Notice Requirement: The creditor must give notice to the insolvency administrator or liquidator of its intention to exercise the right of set-off, offset or netting. This notice should include details of the claims and the basis for the set-off. • Generally, the right of set-off may be exercised dur - ing the insolvency proceedings, provided that the creditor has given the required notice to the insol - vency administrator or liquidator. It is important to
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