The Hong Kong courts have been committed to recognising and assisting foreign insolvency proceedings by empowering foreign liquidators to deal with assets located in Hong Kong. A recent decision has clarified their position on recognition for 'managerial assistance'.
Background
In 2022, the Hong Kong courts held that orders for recognition and assistance will be granted for foreign insolvency proceedings commenced in jurisdictions where the company’s centre of main interests (COMI) is located. Otherwise, such applications will be declined (Re Global Brands Group Holdings Ltd) subject to two exceptions, where:
- The recognition and assistance is limited to recognition of the liquidator’s authority to represent a company and orders incidental to that authority (managerial assistance).
- The recognition and assistance is required 'as a matter of practicality'.
Latest decision
In Re Bull’s-Eye Ltd, the joint liquidators (JLs) of a company incorporated in the British Virgin Islands (BVI) and wound up by BVI courts, sought recognition and assistance from the Hong Kong courts to deal with assets located in Hong Kong.
Despite foreign insolvency proceedings being brought in the company’s place of incorporation rather than where its COMI is located, the court granted managerial assistance to the JLs. This allowed the JLs to take possession of the bank accounts controlled by the company under liquidation in Hong Kong.
Key takeaways
- Hong Kong courts remain committed to granting recognition and assistance to enable foreign liquidators to deal with assets located in Hong Kong.
- Even if foreign insolvency proceedings are commenced in the company’s place of incorporation rather than its COMI, the managerial assistance exception is readily applied by the Hong Kong courts.
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.
Re Bull’s-Eye Ltd [2024] HKCFI 3000
Re Global Brands Group Holdings Ltd [2022] 3 HKLRD 316
