Insolvency

A new chapter in cross-border insolvency: the first application by Hong Kong liquidators for recognition and assistance in Mainland China

On 14 May 2021, a cooperation mechanism was established between the Mainland and Hong Kong in the form of the Record of Meeting of the Supreme People's Court and the Government of the Hong Kong Special Administrative Region and Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Court of the Mainland and the Hong Kong Special Administrative Region and the Supreme People’s Court’s Opinion on taking forward a pilot measure in relation to Recognition and Assistance to Bankruptcy (Insolvency) Proceedings in the Hong Kong Special Administrative Region (the “SPC Opinion”).

Reconsidering the need for parallel schemes of arrangement

The cautious and prudent approach for distressed companies pursuing a Hong Kong scheme of arrangement is to simultaneously pursue a parallel scheme in their home jurisdiction, even if most if not all of its debts are governed by Hong Kong laws. The rationale is to prevent hostile creditors from disrupting the implementation of the scheme in another jurisdiction, thereby better insulating the distressed company.

Nick Gall, Ashima Sood and Kritika Sethia Contribute Chapter on Insolvency for ICLG

Nick Gall, Ashima Sood and Kritika Sethia have contributed the Hong Kong chapter for the 2021 International Comparative Legal Guide (ICLG) to Restructuring & Insolvency. The chapter covers common issues in restructuring and insolvency, including issues that arise when a company is in financial difficulties, restructuring options, insolvency procedures, tax, employees and cross-border issues in 25 jurisdictions.

Insolvencies in Hong Kong in a post-COVID-19 World

COVID-19 has created unforeseen challenges to businesses all over the world, resulting in many companies being unable to survive the pandemic. Hong Kong has been no exception. In Hong Kong, according to data published by the Hong Kong Government’s Official Receiver’s Office, in the first seven months of the year, 5219 compulsory bankruptcy petitions and 247 compulsory winding-up petitions were presented, representing 13.7% and 5.1% year-on-year increase respectively. The effect of COVID-19 may yet be fully reflected by these figures.