CEFC Shanghai International Group Limited (in Liquidation in the Mainland of the People’s Republic of China) [2020] HKCFI 167 (date of judgement 13 January 2020)

This is the first case in which the Hong Kong Court granted a recognition order to administrators of a PRC company appointed by a PRC Court. The case also considered whether a garnishee order nisi should be made absolute if a foreign bankruptcy order is made after the service of the garnishee order nisi.

Background

Just in time for Chinese New Year, a Hong Kong court has taken a major step forward in the developing law on cross-border insolvency by recognising a mainland Chinese liquidation for the first time. InJoint and Several Liquidators of CEFC Shanghai International Group Ltd [2020] HKCFI 167, Mr Justice Harris granted recognition and assistance to mainland administrators in Hong Kong so they could perform their functions and protect assets held in Hong Kong from enforcement.

In But Ka Chon v Interactive Brokers LLC [2019] HKCA 873, the Hong Kong Court of Appeal dismissed an appeal to set aside a statutory demand arising out of online forex futures trading debts.

The Singapore Court may grant freezing injunctions in aid of foreign court proceedings, but the Court must have jurisdiction over the defendant, and a substantive claim must nevertheless be brought against the defendant in Singapore

In Bi Xiaoqiong v China Medical Technologies, Inc (in liquidation) and

another [2019] SGCA 50 (“China Medicalâ€), the Singapore Court of Appeal

(“CoAâ€) confirmed that the Singapore Court may grant freezing (or Mareva)

injunctions in support of foreign court proceedings. However, the Singapore

Hong Kong’s Financial Secretary Paul Chan said last week that there were plans to introduce a bill this year into the city’s Legislative Council to put in place a long-awaited and much needed corporate rescue procedure for Hong Kong.

Hong Kong’s restructuring scene is one of the most cross-border in the world, with three-quarters of its listed companies incorporated offshore and most restructurings having a mainland China connection. But the territory still lacks a statutory regime for cross-border recognition – as recently brought into focus in the restructuring of Singaporean engineering company CW Group. What does this mean for international insolvencies in the region?

INTRODUCTION

The use of trusts for asset protection purposes is well established and – in principle – not improper. However, recent history has seen increasing attempts by creditors to have transfers of assets unwound. A recent UK Supreme Court case saw the Court effectively achieve this by way of a resulting trust finding.1 This article considers the issue from a different angle: insolvency legislation.

ISSUE FOUR 2017 FUNDING IN FOCUS Are Asian arbitral centres going to surpass the old continent? PwC Damages: an expert’s view Who wins, where and why? Stockholm, Sweden, Scandinavia Freshfields Bruckhaus Deringer 60 seconds Q&A with Erin Miller Rankin Brick Court Chambers Competition damages litigation in London pre- and post- Brexit Wilberforce Chambers Getting at trust assets and piercing the corporate veil Disputes funding for corporates CONTENTS Are Asian arbitral centres going to surpass the old continent?

On 15 July 2019, UNCITRAL formally approved a new model law (linked here) for enterprise group insolvencies on how to administer group insolvencies across multiple jurisdictions. A lesson learnt from the 2008 global financial crisis when we saw the collapse of Lehman Brothers was the absence of legislation that dealt with group insolvencies. This has been identified as a major gap in UNCITRAL’s model law on cross-border insolvency (MLCBI).

In Re Southwest Pacific Bauxite (HK) Ltd [2018] 2 HKLRD 449, the Honourable Mr Justice Harris held that a petition to wind up a company on the ground of insolvency should “generally be dismissed” where: