Hong Kong courts recently recognised reorganisation proceedings in Mainland China for the first time in Re HNA Group Co Limited [2021] HKCFI 2897, further enhancing the cooperation between Mainland China and Hong Kong in cross-border insolvency matters.
The facts
Reorganisation proceedings were commenced against HNA Group Co. Limited (HNA), the holding company of a Hainan-based conglomerate in financial difficulties, at the Hainan Province Higher People’s Court (the Hainan Court). The administrators applied for the Hong Kong High Court (the HK Court) to recognise the reorganisation in Mainland China, and for assistance to be granted to its representatives in Hong Kong.
The decision
With reference to CEFC Shanghai International Group Ltd [2020] HKCFI 965, the HK Court could grant recognition and assistance if the proceedings:
- amounted to a 'collective insolvency process', and
- were opened in the relevant company’s country of incorporation.
When interpreting the first test, the HK Court considered that it was clear in this case that the Mainland reorganisation concerned all of HNA’s creditors and hence it was proper to characterise this as a 'collective insolvency procedure'. The second test was uncontroversial as HNA is incorporated in Mainland China.
The HK Court further clarified that despite Hainan not being one of the pilot cities (ie, Shanghai, Shenzhen and Xiamen) in the cooperation agreement between Mainland China and Hong Kong, this lack of reciprocity did not prevent the HK Court from granting recognition and assistance at the request of the Hainan Court.
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.
