7 June 2019

Blowing hot and cold? Recent cases calling for a statutory cross-border insolvency regime in Hong Kong

In the world of international trade, insolvency with cross-border elements is inevitable. Unlike many jurisdictions, there is no statutory mechanism in Hong Kong to deal with cross-border insolvency and the court’s recent conflicting decisions added a greater confusion as to Hong Kong’s approach.

In Re CW Advanced Technologies [2018], the company sought a Singaporean moratorium and subsequently applied for Hong Kong’s provisional liquidation. The court considered a possible solution by combining Singaporean moratorium and Hong Kong’s scheme of arrangement as a “collective insolvency proceeding”.

However, in Re China Fishery Group Ltd [2019] earlier this year, the court rejected the application of a US trustee to discharge Hong Kong’s appointed provisional liquidator that was aimed at assisting its US bankruptcy proceedings. Some noteworthy points are as follows:

  • Jurisdictional connection: One reason for the objection is the lack of jurisdictional connection between the company in question and the US trustee.
  • Public policy consideration: As the US trustee’s application will hinder the enforcement of the company’s undertaking to the court, the application was considered as “self-evidently objectionable and an affront” to the court.

Some may find it confusing between the court’s proactive attitude in the first case in assisting foreign proceedings and its contradicting behaviour in the latter case.

Nevertheless, it is arguable that the court is always consistent as it only reaffirmed its pragmatic approach to rule on a case-by-case basis. To shed a light upon the current confusion while maintaining flexibility, a clear guidance, if not legislation, to deal with cross-border insolvency issues, is needed.

Call To Action Arrow Image

Latest insights in your inbox

Subscribe to newsletters on topics relevant to you.