An Examination and Critical Analysis of the Transfer of Business (Protection of Creditors) Ordinance: A Call for an Urgent Review

Abstract

While it may make good business sense to buy over the assets of an out-going business and to continue the business with previous customers, the Transfer of Business (Protection of Creditors) Ordinance (Cap 49) (the Ordinance) treats these activities as indicative factors that a transfer of business has occurred. In such circumstances, although a purchaser of the business views the business as a new business venture, the Ordinance treats the business as a continuation of the same or ‘old’ business by the purchaser and can hold the purchaser liable for the liabilities of the vendor. This paper will examine and critically analyse the relevant provisions of the Ordinance with reference to relevant decided cases. The paper will also highlight the deficiencies of the Ordinance and calls for a review of the Ordinance.