By Heidi Chui (Stevenson, Wong & Co)
Introduction
Hong Kong maintains a distinct common law legal system as a special administrative region of China (HKSAR) under the ‘one country, two systems’ principle. It has numerous financial institutions and is a leading international financial centre.
The promulgation of the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area on 18 February 2019 solidified Hong Kong’s role as the super-connector in the development of the Greater Bay Area.
On 14 May 2021, the Supreme People’s Court and the HKSAR government signed a Record of Meeting on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and the HKSAR (the Record of Meeting), fostering further legal cooperation in civil and commercial matters between Hong Kong and mainland China (the Cooperation Agreement).
The Cooperation Agreement is well-established in Hong Kong, with courts issuing letters of request to mainland courts in the pilot cities of Shanghai, Xiamen and Shenzhen, which were chosen for their close trading ties. While not officially extended to other cities, its framework has also extended to non-pilot cities.
Development of the corporate rescue legal framework in Hong Kong
In Hong Kong, corporate insolvency is primarily governed by the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
Hong Kong law lacks a statutory restructuring procedure, but creditors can negotiate an informal contractual restructuring agreement. This requires cooperation from all creditors, as any one creditor can still choose to wind up the company.
The corporate rescue of a financially distressed company is limited to out-of-court workouts, schemes of arrangement or the appointment of provisional liquidators, leaving creditors with limited options.
Companies (Corporate Rescue) Bill
Corporate failures surged owing to the covid-19 pandemic. In March 2020, the HKSAR government announced that the new Companies (Corporate Rescue) Bill was at an advanced drafting stage; however, at the time of writing, it has still not been scheduled for legislation.
Financial Institutions (Resolution) Ordinance
This Ordinance restricts counterparties from triggering default events solely owing to a financial institution’s entry into resolution as long as contractual obligations are met. This includes a temporary stay on termination rights for up to two business days, supporting the orderly resolution of failing institutions.
Non-statutory guidelines
Under the non-statutory guidelines jointly issued by the Hong Kong Monetary Authority (HKMA) and the Hong Kong Association of Banks (HKAB) in 1999, banks should support borrowers in financial difficulty by maintaining liquidity, and not withdrawing facilities or hastily initiating receivership or repayment demands.[1]
The Hong Kong Association of Restricted Licence Banks and Deposit-taking Companies and the HKAB released a revised Code of Banking Practice in 2023, endorsed by the HKMA. The Code is non-statutory. It guides authorised institutions in customer service and requires institutions to promptly inform customers of repayment difficulties and notify them of available debt restructuring services.[2]
Recent developments on the interaction between winding-up petitions, arbitration agreements and exclusive jurisdiction clauses
Traditional approach
The Hong Kong courts have traditionally dismissed winding-up petitions for arbitration only if the debtor proves a bona fide defence to the debt. Since winding-up petitions are a class remedy for all creditors, the courts have typically granted these petitions if the debtor fails to pay and lacks a credible defence, without requiring arbitration.
Lasmos approach
In Re Southwest Pacific Bauxite,[3] the Court of First Instance broadly followed the English Court of Appeal’s approach in Salford Estates (now overturned).[4] It emphasised the Arbitration Ordinance’s policy of supporting party autonomy in dispute resolution. It held that an insolvency petition should be dismissed in favour of arbitration when:
- the debtor disputes the petitioning debt;
- the contract concerning the debt includes an arbitration clause; and
- the debtor initiates the contractually mandated arbitration process.[5]
Under this approach (ie, the Lasmos approach), a debtor can stay insolvency proceedings by disputing the debt and forcing arbitration, even without a genuine dispute. This ruling creates a significant obstacle for winding-up petitioners when the agreement includes an arbitration clause.
But Ka Chon
In the 2019 case of But Ka Chon, the Court of Appeal considered the Lasmos approach on an obiter basis.[6] It held that creditors’ statutory right to petition for winding-up or bankruptcy is part of Hong Kong law. It stated that the Lasmos approach, which favours arbitration when three requirements are met, significantly curtails creditors’ rights without legislative intent in the Arbitration Ordinance to alter insolvency legislation.[7]
Post-Lasmos cases
In Dayang, the Court of First Instance deviated from the Lasmos approach.[8] The Court stated the law as follows:
- a debtor disputing a debt must show a bona fide dispute on substantial grounds (a mere denial or non-admission is insufficient);
- an arbitration agreement is irrelevant to the court’s decision;
- commencing arbitration is not proof of a bona fide dispute but may be relevant evidence; and
- a creditor-petitioner that is aware of a bona fide dispute risks paying the debtor’s costs on an indemnity basis and potential liability for malicious prosecution.[9]
In Re Hong Kong Bai Yuan, the Court of First Instance held that an arbitration agreement and other relevant circumstances carry significant weight in its decision; however, the debtor must show a genuine dispute requiring arbitration.[10]
Guy Lam
In 2023, the Court of Final Appeal considered whether to decline jurisdiction in a bankruptcy petition involving an exclusive jurisdiction clause.[11] It reaffirmed that a petitioner is typically entitled to a bankruptcy or winding-up order if the debt is not bona fide disputed.
This approach does not apply if there is an exclusive jurisdiction clause. Parties should litigate in the chosen forum unless countervailing factors exist, such as insolvency risk to third parties or a frivolous dispute.[12]
The Court also stated that, in exercising its discretion, it should consider the relevant public policy considerations.[13] It held that the importance of public policy on bankruptcy jurisdiction is much diminished when one creditor petitions against another, with no evidence of a broader creditor community at risk.[14]
Post-Guy Lam cases
The Hong Kong courts have further developed relevant jurisprudence following Guy Lam.
Simplicity
The Court of First Instance addressed the same issue as Guy Lam: whether to decline jurisdiction owing to an agreed dispute resolution mechanism;[15] however, Simplicity involved an arbitration clause while Guy Lam involved an exclusive jurisdiction clause.
The Court held that the traditional approach was inappropriate for debts covered by an arbitration clause, emphasising the need to honour the parties’ contractual agreement to arbitrate.
Discretion involves a multi-factorial analysis, including public policy, and should not be limited by the ‘strong reasons’ or ‘wholly exceptional circumstances’ test, allowing the court flexibility based on the case’s circumstances.[16] The court retains flexibility to deal with the case as the circumstances require.
Re NT Pharma
The Court of First Instance found that the company’s cross-claim did not constitute a valid ground to dismiss or stay the winding-up petition pending arbitration.[17] It emphasised that a cross-claim to defend against a winding-up petition must be genuine, serious and substantial. If the cross-claim is closely connected to the petition debt and could result in an equitable set-off, the court may consider it, given the serious consequences of a winding-up order.[18]
Re Shandong Chenming
In April 2024, the Court of Appeal held that in bankruptcy or winding-up cases, the court should consider the entire relationship between the parties, including the debtor’s cross-claims, which are treated like disputes of the debt.[19] If the cross-claim is subject to an arbitration clause, the court should not determine its merits but uphold the contractual agreement to resolve disputes in another forum.
The Court of Appeal affirmed that the Guy Lam approach applies to disputes under an exclusive forum agreement, whether raised as a debt dispute, set-off claim or cross-claim without set-off.
Sian
In June 2024, the Privy Council, on appeal from the Eastern Caribbean Supreme Court (British Virgin Islands (BVI)), issued a landmark ruling on the courts’ discretion to wind up a company when there is no bona fide dispute on substantial grounds but there is an arbitration clause.[20]
The Privy Council found the English Court of Appeal’s decision in Salford Estates was incorrect, as winding-up petitions do not determine the petitioner’s claim to be owed money or the underlying debt;[21] therefore, requiring arbitration in the absence of a genuine dispute only adds unnecessary delay and expense.[22] The correct test for BVI law is whether the debt is disputed on genuine and substantial grounds, even with a generally worded arbitration agreement or exclusive jurisdiction clause.[23]
Although this ruling is not binding on Hong Kong courts, it is likely to be persuasive. Nevertheless, the Guy Lam decision remains authoritative in Hong Kong, with no pending appeals in the Simplicity and Shandong Chenming cases.
The Court of Final Appeal retains discretion to grant a bankruptcy order if the defence is frivolous or an abuse of process. This implies that the Hong Kong courts will still need to evaluate the merits of a debtor’s defence. Whether the Guy Lam approach, which prioritises contractual forum choice, would lead to different outcomes than the Sian approach, which focuses on genuinely disputed debts, remains uncertain.
Recognition of cross-border insolvency proceedings under common law
Hong Kong has not adopted the UNCITRAL Model Law on Cross-Border Insolvency; however, the courts recognise and assist cross-border insolvency proceedings based on common law and the principle of modified universalism. In recent years, the courts have granted numerous orders to facilitate debt restructuring for Hong Kong-listed companies incorporated offshore.
Re CEFC Shanghai
The Court of First Instance granted an order for recognition and assistance to liquidators of a mainland China-incorporated company for the first time.[24] It held that to recognise and assist insolvency proceedings from a civil law jurisdiction, the proceedings must be collective insolvency proceedings and be opened in the company’s country of incorporation.[25]
The Court was satisfied that the mainland liquidation was a collective insolvency proceeding, which qualified for recognition in Hong Kong.
Re HNA Group
The Court of First Instance granted its first-ever order for recognition and assistance to mainland Chinese reorganisation proceedings following an administrator’s application and a letter of request from the Hainan Province Higher People’s Court.[26]
Applying the two well-established criteria from Re CEFC Shanghai, the Court held that the reorganisation proceedings were a collective insolvency process conducted in mainland China, where the distressed company was incorporated.
The Court noted that Hainan was not a pilot city under the Cooperation Agreement and might not recognise Hong Kong insolvency proceedings; however, it concluded that lack of reciprocity was not an automatic bar to recognition and assistance.
Re GOCC
The Court of First Instance confirmed the approach in HNA Group, granting recognition and assistance for Guangzhou liquidation proceedings despite it not being a pilot city.[27] It summarised the criteria for granting recognition and assistance to foreign insolvency proceedings as follows:
- they must be collective insolvency proceedings, including those in civil law jurisdictions;
- they must occur in the company’s centre of main interest (COMI);
- assistance must be necessary for the administration of the foreign winding-up or office holders’ functions; and
- the order must align with the assisting court’s substantive law and public policy.[28]
The Court recommended that applicants follow the procedures of the Cooperation Agreement for requests from mainland courts outside the pilot cities for consistency.
Re Trinity
This case involved an application by the Hong Kong liquidators of Trinity International Brands Limited (Trinity) for a letter of request directed to the Shanghai court.[29] The liquidators sought from the Hong Kong courts the recognition of Trinity’s liquidation and assistance in taking control of Trinity’s Shanghai subsidiary.
The Cooperation Agreement applied as Shanghai is a pilot city. The Court of First Instance confirmed that Hong Kong liquidators seeking recognition and assistance from a mainland Chinese court must satisfy the Hong Kong court that:
- the Cooperation Agreement requirements are met; and
- assistance is necessary for the liquidators to perform their functions in the mainland.[30]
The rise in cross-border insolvency cases shows the readiness of the Hong Kong courts to assist, with its insolvency law expected to mature and strengthen its status as Asia’s leading financial and debt restructuring hub.
Cross-border insolvency and keepwell deeds
Chinese companies have used keepwell deeds to enhance credit for their subsidiaries’ offshore bond issuance owing to repatriation limits on overseas proceeds. The use of keepwell deeds declined after the State Administration of Foreign Exchange lifted these limits in January 2017; however, issues with keepwell deeds have still arisen in the Hong Kong courts.
In Nuoxi[31] and Citicorp,[32] the courts held that keepwell disputes should be resolved in Hong Kong according to the contractual exclusive jurisdiction clause, despite recognising the keepwell provider’s mainland Chinese insolvency proceedings.
In May 2023, the Court of First Instance confirmed the enforceability of keepwell deeds, thereby promoting judicial cooperation between Hong Kong and mainland Chinese courts.[33] In January 2024, the Court of Appeal clarified obligations, performance modes and loss assessment in the context of breaches of keepwell deeds.[34]
Recognition of foreign voluntary liquidation
In Singularis, the Privy Council described the principle of modified universalism as the courts’ common law power to recognise and assist foreign winding-up proceedings as far as they can;[35] however, this principle does not apply when the foreign liquidation is voluntary and the company is balance-sheet solvent.
An exception can be found in Re Supreme Tycoon, where the Court of First Instance held that the mere fact a foreign liquidation is voluntary does not prevent the court from recognising and assisting that liquidation under the principle of modified universalism.[36]
The key issue for recognising and assisting a foreign insolvent liquidation started by a shareholders’ resolution is whether the proceeding is collective, benefiting all creditors, not whether the foreign insolvency officer is a court officer.[37]
The Court noted that despite the liquidation starting with a shareholders’ resolution, it remained a collective insolvency proceeding; therefore, it granted the recognition order for the liquidators to investigate the company’s affairs.
However, a solvent foreign liquidation, similar to a ‘private arrangement’ as described by the Privy Council in Singularis, does not fall under the principle of modified universalism and, therefore, will not be recognised or assisted by the court.[38]
No approval for examination constituting a fishing expedition
In Re a Civil Matter Now Pending in US District Court for WD Wash, the Court of First Instance rejected two letters of request from the Washington Federal Court seeking to compel two Hong Kong distressed debt investors to provide oral testimony about alleged receivables owed to a foreign company.[39]
The Court emphasised that the discovery was sought from non-parties to the Washington Federal Court judgments and aimed at potential future proceedings; therefore, it deemed the proposed examination a pretrial discovery, essentially a fishing expedition, prohibited under section 76(3) of the Evidence Ordinance.[40]
The Court of Appeal upheld the first instance decision.[41] It observed:
- the Hong Kong courts must respect the requesting court’s assessment of the evidence’s necessity and relevance but decide independently if it constitutes fishing under section 76(3) of the Evidence Ordinance;
- there are substantial differences between US and Hong Kong discovery laws, and Hong Kong law must be applied;
- for section 76(3), the courts will consider the request’s nature and purpose based on all relevant circumstances; and
- fishing is impermissible if the evidence is not for resolving live issues before the requesting court but for investigations.[42]
The Court of Appeal found it ‘crystal clear’ that the proposed examination was investigatory and not for obtaining evidence to resolve live issues in the Washington Federal Court.[43]
Recognition of foreign provisional liquidator appointed on soft-touch basis
Soft-touch provisional liquidation allows a company to remain under directors’ control while protecting it from individual creditors, facilitating debt restructuring for a better outcome than liquidation. Recent Hong Kong court cases have upheld that, despite lacking the power to appoint provisional liquidators solely for restructuring, they can recognise and assist foreign liquidators appointed for this purpose.
Re Moody
The Court of First Instance granted a recognition order to foreign provisional liquidators appointed on a soft-touch basis to explore and facilitate a company’s restructuring.[44]
The joint and several liquidators of Bermuda-incorporated Moody Technology Holdings Limited (Moody) sought recognition from the Hong Kong court for their appointment and powers granted by the Bermuda court. Appointed on a soft-touch basis to restructure Moody and its debts, the key issue was whether the Hong Kong court should recognise the liquidators despite soft-touch provisional liquidation being impermissible under Hong Kong law under Re Legend International Resorts Limited.[45]
The Court held that provisional liquidators could be appointed with powers to explore and facilitate company restructuring when warranted.
Re China Oil
The Court of First Instance continued the trend of recognising foreign soft-touch provisional liquidators.[46]
A Cayman court appointed provisional liquidators for China Oil Gangran Energy Group Holdings Limited to facilitate debt restructuring, and they sought recognition from the Hong Kong courts. The Hong Kong court, referencing Re CEFC Shanghai and its practice of recognising foreign soft-touch provisional liquidation, granted the recognition order.
These decisions highlight the Hong Kong courts’ commitment to modified universalism and support for cross-border restructurings despite not appointing domestic soft-touch provisional liquidators; however, the courts remain critical of inappropriate uses of soft-touch provisional liquidation.
Problematic use of soft-touch provisional liquidation
Re Lamtex
The Court of First Instance refused to adjourn a winding-up petition sought by joint provisional liquidators appointed in Bermuda;[47] instead, it made an immediate winding-up order.
In the Court’s view, Lamtex did not have a credible plan to restructure its debt and was likely using the Bermuda application to engineer a de facto moratorium, which could not be obtained under Hong Kong law. The Court described the soft-touch provisional liquidation as ‘questionable’ in this context.[48]
In Re Imperial Pacific, the Court of First Instance held that it would only adjourn a winding-up petition if the company demonstrated a useful purpose.[49] For adjournments to pursue restructuring, the company must show at least ‘a reasonable prospect’ of completing the restructuring to displace the petitioner’s right to an immediate winding-up order.[50]
In Re Jiayuan, the Court of First Instance stated that a company opposing a winding-up petition must show a concrete restructuring proposal or scheme of arrangement to demonstrate a reasonable prospect of restoring solvency.[51]
Re Ping An Securities
There were two proceedings concerning Ping An Securities.[52] The Court of First Instance adjourned a creditor’s winding-up petition and ordered recognition and assistance for the debtor’s soft-touch provisional liquidation in Bermuda. Despite the creditor’s opposition, the Court found that the debtor met the criteria for restructuring outlined in Re Huiyuan Juice, justifying the adjournment.[53]
However, in later proceedings, the provisional liquidators failed to update or contact the creditor about the progress of the restructuring. The Court found this lack of communication unsatisfactory and expressed concerns about the misuse of soft-touch provisional liquidation, known as the Z-Obee technique.[54] Consequently, the Court ordered a standard winding-up.
Re China Bozza and Re Victory City
In Re China Bozza[55] and Re Victory City,[56] the Court of First Instance expressed scepticism towards similar uses of soft-touch provisional liquidation.
In Re China Bozza, the Court granted recognition under private international law but, for the first time, refused general assistance as granted previously. The joint provisional liquidators failed to satisfy the Court that they were protecting creditors’ interests.
Re Global Brands Group
In Re Global Brands Group, the Court of First Instance observed that Hong Kong lacks legislation for debt restructuring.[57] Soft-touch provisional liquidation was used following the Asian financial crisis, but the Court of Appeal halted this practice in Re Legend.[58]
Companies then used offshore soft-touch liquidations, recognised by the Hong Kong courts, but this Z-Obee technique was often abused to improperly obtain debt moratoriums. The Court of First Instance considered that the courts should generally decline to recognise such offshore liquidators in the future.[59]
Recent judicial scrutiny in Hong Kong indicates a cautious and critical stance towards soft-touch provisional liquidation. The courts now emphasise the need for credible restructuring plans and genuine efforts to protect creditors’ interests. This evolving approach suggests stricter oversight and reduced tolerance for using soft-touch provisional liquidation as a de facto moratorium.
Courts’ discretion to wind up a foreign company
In Shandong Chenming v Arjowiggins, the Court of Final Appeal stated the principles governing the discretion to wind up a foreign company.[60] The three thresholds are as follows:
- there must be a sufficient connection with Hong Kong, but this does not necessarily require assets within the jurisdiction;
- there must be a reasonable possibility that the winding-up order will benefit those applying for it; and
- the court must be able to exercise jurisdiction over one or more persons in distributing the company’s assets.[61]
Numerous cases address the application of these criteria.
Re Up Energy Development Group Limited
The Court of First Instance granted a winding-up order against a company already wound up in Bermuda, recognising the primary jurisdiction of incorporation.[62] The Court adopted ‘self-imposed constraints’, requiring three core conditions that must be met to wind up a foreign company.[63]
Acknowledging that a foreign winding-up order does not eliminate the need for local orders, the Court noted that a Hong Kong winding-up would benefit creditors by avoiding multiple, costly proceedings. Without it, the Bermuda liquidators would face inefficient, burdensome applications for local recognition and powers.
Re 北京精准溝通傳媒科技有限公司
The Court of First Instance made a winding-up order against a company incorporated in mainland China.[64] The key issue was whether there was a sufficient connection with Hong Kong. The Court affirmed this, noting that significant company funds in Hong Kong were the only known assets with which to satisfy debts. This fact justified the Court’s winding-up order regarding the mainland China-incorporated company.[65]
Recent developments on sanctioning schemes of arrangement
A scheme of arrangement is a court-approved agreement to reorganise a company’s structure, debts or operations. In Hong Kong, it effectively compromises debts, including those governed by non-Hong Kong law, despite the old common law Gibbs rule.[66]
The Gibbs rule states that a debt governed by English law can only be discharged or compromised according to English law, regardless of foreign insolvency proceedings; therefore, a foreign composition does not discharge a debt unless discharged under the law governing it.
In Re Singyes, the Court of First Instance considered an exception to the Gibbs rule and, more generally, the principles of sanctioning a scheme.[67] China Singyes Solar Technologies Holdings Limited (Singyes), incorporated in Bermuda and listed in Hong Kong, proposed a Hong Kong scheme to compromise convertible bonds governed by English law and notes governed by New York law. The Court found the scheme would be effective in relevant jurisdictions without needing recognition from English and US courts, as 100 per cent of bondholders voted in favour, thereby creating an exception to the Gibbs rule.
Although the Gibbs rule remains valid in Hong Kong, Re Singyes shows that the rule is not a bar for parties to the success of cross-border restructuring.
Hong Kong–mainland China mutual recognition of and assistance in insolvency proceedings
The Cooperation Agreement aims to rescue financially troubled businesses, protect debtor assets and creditor interests and promote an efficient insolvency regime. It covers bankruptcy and reorganisation in mainland China and debt restructuring in Hong Kong, encouraging consensus among creditors to revive businesses.
In 2021, the Supreme People’s Court issued its Opinion on Taking Forward a Pilot Measure in relation to the Recognition of and Assistance to Insolvency Proceedings in the HKSAR (the Opinion). In particular, article 4 of the Opinion is essential guidance to which the Hong Kong and mainland Chinese courts have frequently referred. Article 6 of the Opinion further sets out the procedures for an application by a Hong Kong liquidator.
The Hong Kong Department of Justice has also issued the Procedures for a Mainland Administrator’s Application to the Hong Kong SAR Court for Recognition and Assistance – Practical Guide (the Practical Guide).
Hong Kong liquidators’ application for recognition and assistance in mainland China
Re Samson Paper
For the first time, the Court of First Instance approved the application by a Hong Kong-incorporated company’s liquidator to issue a letter of request to a mainland Chinese court for recognition and assistance under the Cooperation Agreement.[68] Upon receiving the letter of request from the Hong Kong court, the Shenzhen Intermediate People’s Court approved the application.[69]
The Shenzhen Intermediate People’s Court agreed with the Hong Kong court that the company’s COMI was in Hong Kong because of its incorporation and 40-year business presence there, including the fact that most of its assets were in Hong Kong.
Meeting the criteria in articles 4 and 6 of the Opinion, the Shenzhen court approved the Hong Kong court’s request. This marked the first formal recognition of Hong Kong insolvency proceedings by a mainland Chinese court since the Record of Meeting was signed.
Re Zhaoheng Hydropower
The Court of First Instance approved a letter of request to the Shenzhen Intermediate People’s Court for aid in liquidation.[70] The liquidators sought recognition and assistance in mainland China to manage significant assets in Shenzhen, and the Court considered it appropriate to assist.
Re Ozner Water and Re Hong Kong Fresh Water
In Re Ozner Water[71] and Re Hong Kong Fresh Water[72] (a Hong Kong subsidiary of Ozner Water), the Court of First Instance granted two applications to issue a letter of request to a Shenzhen court and a Shanghai court, respectively.
Despite Ozner Water being incorporated in the Cayman Islands, the Hong Kong court found the company’s COMI to be in Hong Kong under article 4 of the Opinion.
It is unclear whether the Shenzhen court has recognised insolvency proceedings for the non-Hong Kong-incorporated company; however, the Shanghai No. 3 Intermediate People’s Court recognised Hong Kong Fresh Water’s winding-up proceedings and liquidators, allowing them to perform their duties in mainland China (and without commenting on the Hong Kong court’s COMI criteria).[73]
Re Husk’s Green
The Court of First Instance was willing to issue a letter of request to the Xiamen Intermediation People’s Court.[74] This case, notable for defects in the initial application, underscores the importance of compliance with the Cooperation Agreement and case law.
An increasing body of case law offers precise guidance on applying the article 4 of the Opinion, showing that the Cooperation Agreement is becoming a well-established mechanism for cross-border insolvency recognition and assistance.
Letters of request from the mainland Chinese courts for recognition and assistance in Hong Kong
Re GOCC involved an application for recognition and assistance of mainland proceedings.[75] The Guangzhou court-appointed administrator of Guangdong Overseas Construction Corporation (GOCC) applied to take control of GOCC’s shares in a Hong Kong company, supported by a letter of request from the Guangzhou court.
The Court of First Instance clarified that its authority to recognise and assist foreign insolvency proceedings was based on common law, not the Cooperation Agreement, as Guangzhou is not a designated pilot city; however, the Court noted that mainland Chinese courts outside pilot cities could still request assistance. It recommended following the Agreement and Practical Guide for consistency.[76]
No reported cases exist of letters of request from the courts in Shanghai, Xiamen or Shenzhen to the Hong Kong courts for insolvency assistance.
* This article was originally published on the Global Restructuring Review.
[1] ‘Hong Kong Approach to Corporate Difficulties’, published in November 1999.
[2] Code of Banking Practice, December 2023, Section 33.5 (card issuers) and 24.16 (loans).
[3] Re Southwest Pacific Bauxite (HK) Limited [2018] HKCFI 426, [2018] 2 HKLRD 449.
[4] Salford Estates (No. 2) Limited v Altomart Limited (No. 2) [2014] EWCA 575 Civ, [2015] Ch 589.
[5] Southwest Pacific Bauxite, paragraph 31.
[6] But Ka Chon v Interactive Brokers LLC [2019] HKCA 873, [2019] 4 HKLRD 85.
[7] ibid, paragraph 63.
[8] Dayang (HK) Marine Shipping Co Limited v Asia Master Logistics Limited [2020] HKCFI 311, [2020] 2 HKLRD 423.
[9] ibid, paragraph 136.
[10] Re Hong Kong Bai Yuan International Business Co Limited[2022] HKCFI 960, [2022] HKCU 1504.
[11] Guy Kwok-Hung Lam v Tor Asia Credit Master Fund LP [2023] HKCFA 9, [2023] HKCU 1960.
[12] ibid, paragraph 105.
[13] ibid, paragraph 101.
[14] ibid, paragraph 102.
[15] Simplicity & Vogue Retailing (HK) Co, Limited [2024] HKCA 299, [2024] HKCU 1511.
[16] ibid, paragraph 39.
[17] Re NT Pharma International Co Limited [2023] HKCFI 1623, [2023] 5 HKC 352.
[18] ibid, paragraph 29.
[19] Re Shandong Chenming Paper Holdings Limited [2024] HKCA 352, paragraph 39.
[20] Sian Participation Corp (in liquidation) v Halimeda International Limited [2024] UKPC 16.
[21] ibid, paragraph 88.
[22] ibid, paragraph 92.
[23] ibid, paragraph 99.
[24] Re CEFC Shanghai International Group Limited (in liquidation in the Mainland of PRC) [2020] HKCFI 167, [2020] 1 HKLRD 676.
[25] ibid, paragraph 8.
[26] Re HNA Group Co Limited [2021] HKCFI 2897, [2021] HKCU 4647.
[27] Re Guangdong Overseas Construction Corporation (in liquidation) [2023] HKCFI 1340, [2023] 3 HKLRD 262.
[28] ibid, paragraph 17.
[29] Re Trinity International Brands Limited (in liquidation) [2023] HKCFI 1581, [2023] HKCU 2580.
[30] ibid, paragraph 12.
[31] Nuoxi Capital Limited & Others v Peking University Founder Group Co Limited [2021] HKCFI 3817, [2022] 2 HKC 1.
[32] Citicorp International Limited v Tsinghua Unigroup Co Limited [2022] HKCFI 1558, [2022] 2 HKLRD 1225.
[33] Nuoxi Capital Limited (In Liquidation in the British Virgin Islands) v Peking University Founder Group Company Limited [2023] HKCFI 1350, [2023] HKCLC 263.
[34] Nuoxi Capital Limited (in liquidation in the British Virgin Islands) v Peking University Founder Group Company Limited [2024] HKCA 445, [2024] HKCU 1789.
[35] Singularis Holdings Limited v PricewaterhouseCoopers [2015] AC 1675, [2015] 2 WLR 971.
[36] Re Joint Liquidators of Supreme Tycoon Limited (in liquidation in the British Virgin Islands) [2018] HKCFI 277, [2018] 1 HKLRD 1120.
[37] ibid, paragraph 15.
[38] Singularis, paragraphs 25 and 113.
[39] Re a Civil Matter Now Pending in United States District Court for the Western District of Washington at Seattle [2019] HKCFI 1738, [2020] 1 HKC 350.
[40] ibid, paragraph 45.
[41] Re a Civil Matter Now Pending in United States District Court for the Western District of Washington at Seattle [2020] HKCA 766, [2020] 5 HKLRD 30.
[42] ibid, paragraphs 39 to 41.
[43] ibid, paragraph 44.
[44] Re the Joint Provisional Liquidators of Moody Technology Holdings Limited [2020] HKCFI 416, [2020] 2 HKLRD 187.
[45] Re Legend International Resorts Limited [2006] HKCA 74, [2006] 2 HKLRD 192.
[46] Re the Joint and Several Provisional Liquidators of China Oil Gangran Energy Group Holdings Limited [2020] HKCFI 825, [2020] HKCLC 803.
[47] Li Yiqing v Lamtex Holdings Ltd [2021] HKCFI 622, [2021] 2 HKLRD 177.
[48] ibid, paragraph 42.
[49] Re Imperial Pacific International Holdings Limited [2024] HKCFI 1102, [2024] HKCLC 239.
[50] ibid, paragraph 17.
[51] Re Jiayuan International Group Limited [2023] HKCFI 1254, [2023] HKCLC 239.
[52] Re Ping An Securities Group (Holdings) Limited [2021] HKCFI 651, [2021] HKCFI 1394.
[53] Re China Huiyuan Juice Group Limited [2020] HKCFI 2940, [2021] 1 HKLRD 255.
[54] Re Z-Obee Holdings Limited [2017] HKCFI 2204, [2018] 1 HKLRD 165.
[55] Re China Bozza Development Holdings Limited [2021] HKCFI 1370, [2021] HKCLC 845.
[56] Re the Joint and Several Provisional Liquidators of Victory City International Holdings Limited [2021] HKCFI 1370.
[57] Re Global Brands Group Holding Limited (In Liquidation) [2022] HKCFI 1789.
[58] Re Legend International Resorts Limited [2006] 2 HKLRD 192.
[59] Re Global Brands Group, paragraph 12.
[60] Shandong Chenming Paper Holdings Limited v Arjowiggins HKK 2 Limited [2022] HKCFA 11, [2022] HKCLC 787.
[61] ibid, paragraph 3.
[62] Re Up Energy Development Group Limited [2022] HKCFI 1329, [2022] 2 HKLRD 993.
[63] ibid, paragraph 45.
[64] Re 北京精准溝通傳媒科技有限公司 (Formerly known as 北京精准溝通傳媒科技股份有限公司) [2024] HKCFI 1091, [2024] HKCLC 289.
[65] ibid, paragraph 30.
[66] Antony Gibbs & Sons v La Société Industrielle et Commerciale des Métaux [1890] 25 QBD 399.
[67] Re China Singyes Solar Technologies Holdings Limited [2020] HKCFI 467, [2020] HKCLC 379.
[68] Re Samson Paper Co Limited (in liquidation) [2021] HKCFI 2151, [2021] 3 HKLRD 727.
[69] Yue 03 Ren Gang Po No. 1.
[70] Re Zhaoheng Hydropower (Hong Kong) Limited (in liquidation) [2022] HKCFI 248, [2022] HKCU 352.
[71] Re Ozner Water International Holding (Hong Kong) Limited [2022] HKCFI 363, [2022] 2 HKC 634.
[72] Re Hong Kong Fresh Water International Group Limited [2022] HKCFI 924, [2022] HKCLC 395.
[73] [2022] Hu 03 Ren Gang Po No. 1.
[74] Re Husk’s Green Technology Holding Co., Limited (in liquidation) [2023] HKCFI 3054, [2024] 1 HKLRD 134.
[75] Re GOCC.
[76] paragraph 22, id.