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Confidential.
N. & Co., 321.
Enclosure 8.
(5).
COLONIAL SECRETARY'S OFFICE,
HONGKONG, 1st February, 1915.
GENTLEMEN,
In continuation of my letters of the 30th October, 7th November and 24th November, 1914, I am directed to convey to you the following further instructions of His Excellency the Governor :-
Payments in Priority.
In any winding up in which there is reason to suppose that the assets of the firm in the liquidators' hands will prove insufficient to provide for the payment in full of all liabilities to be discharged thereout the liquidators must be careful to see that no payments are made to any creditors who are not clearly secured creditors or in respect of liabilities which would ordinarily have been discharged by branches outside the Colony.
The question of whether a creditor is a secured creditor or not, or whether any liability would have been so discharged, may prove one of great nicety. Any credi- tor who claims to have the proceeds of particular assets paid to him as being a secured creditor in respect thereof should be requested to furnish particulars of his claim to the liquidators in order that such claim may be admitted or rejected. If on such particulars being furnished the liquidators are in any doubt as to whether the claim is valid or not they should consult their legal advisers or the Attorney General. Similar consultation should be resorted to if any doubt arises as to where a liability would ordinarily have been discharged,
The liquidators should prepare a statement showing who are, or who claim to be, secured creditors, and what the security consists of and what the claim is founded on. Similar statements should be prepared in respect of unsecured credi- tors whose liabilities would ordinarily have been discharged by branches outside the Colony.
Where it appears clear that the assets, though possibly not sufficient to provide for the payment in full of all unsecured liabilities, will nevertheless be sufficient to provide for the payment of a substantial pro rato saun in respect of all such liabili- ties, application should, when funds permit, he made for the sanction of a pro rata payment.
No payments or remittances should be made out of moneys received for goods delivered prior to or during the liquidators' appointment unless it is clear that the
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