Hong Kong Ordinances

CLEARING AND SETTLEMENT SYSTEMS ORDINANCE - SECT 20

Proceedings of designated systems take precedence over law of insolvency

(1) None of the following shall be regarded as to any extent invalid on the
ground of inconsistency with the law of insolvency regarding distribution of
the assets of a person on bankruptcy or winding up, or on the appointment of a
liquidator, trustee in bankruptcy or equivalent officer over any of the assets
of a person—

   (a)  a transfer order;

   (b)  any disposition of property in pursuance of a transfer order;

   (c)  the default arrangements of a designated system;

   (d)  the operating rules of a designated system as to the settlement of
        transfer orders not dealt with under its default arrangements; or

   (e)  a contract for the purpose of realizing collateral security in
        connection with participation in a designated system otherwise than
        pursuant to its default arrangements.

(2) The powers of a relevant insolvency office-holder in his capacity as such
and the powers of a court under the law of insolvency, shall not be exercised
in such a way as to prevent or interfere with—

   (a)  the settlement of a transfer order in accordance with the operating
        rules of a designated system not dealt with under its default
        arrangements;

   (b)  any action taken under the default arrangements of a designated
        system; or

   (c)  any action taken to realize collateral security in connection with
        participation in a designated system otherwise than pursuant to its
        default arrangements.

(3) A debt or other liability arising out of a transfer order which is the
subject of action taken under default arrangements may not be proved in a
bankruptcy or winding up until the completion of the action taken under
default arrangements.

(4) A debt or other liability which by virtue of subsection (3) may not be
proved shall not be taken into account for the purposes of any set-off until
the completion of the action taken under default arrangements.