The Hong Kong Court has broken yet more new ground by recognising Mainland reorganisation proceedings for the first time in Re HNA Group Co Limited [2021] HKCFI 2897.

In another leap forward for cross-border insolvency cooperation between Hong Kong and Mainland China, the Hong Kong Court has issued its very first letter of request to a Mainland Court requesting recognition and assistance of Hong Kong liquidators under the new arrangement for mutual recognition of and assistance to insolvency proceedings introduced on 14 May 2021 (New Arrangement, which we wrote about

We recently wrote about the New Arrangement for mutual recognition of insolvency processes between certain pilot areas in the Mainland (i.e. Shanxi, Xiamen and Shenzhen) and Hong Kong (New Arrangement).

Many investors, including PE firms, are waiting with bated breath to see how the UK economy, currently dependent on COVID-19-related government support, will respond once that stimulus is withdrawn. An increase in UK company insolvencies is expected, creating opportunities for savvy investors to acquire businesses at bargain prices, while at the same time appearing to be white knights swooping in to save a beloved high street brand or large regional employer.

On 8 July 2021, the Payment and Electronic Money Institution Insolvency Regulations 2021 (the Regulations) will come into force in the UK and introduce a new special administration regime for insolvent payment institutions (PIs) and electronic money institutions (EMIs). The key purposes of the Regulations are to ensure that, if a PI or EMI becomes insolvent (and/or it is fair or expedient to put the institution into special administration), funds are quickly returned to customers and any shortfalls in the amounts available are minimised.

The Hong Kong Court of Final Appeal (the “CFA“) has clarified in a recent judgment the application of section 182 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (“CWUMPO“) and when the court will grant a validation order.

In dismissing Darty Holdings SAS’ (“Darty”) appeal in a recent decision[1], Miles J. has confirmed that an English court will look at the actual relationship between the parties involved, rather than the wider context, when considering whether those parties are connected. This will be the case even where the wider context consists of a transaction that will, immediately following the relevant transaction, sever that relationship.

Initial arrangements have been put in place for mutual recognition and assistance to be provided by courts in Mainland China and Hong Kong in respect of corporate insolvency proceedings. This is a significant and long awaited development which could substantially enhance the ability for cross border insolvencies and restructurings to be administered and implemented across the two jurisdictions.

On 14 May 2021, the Vice-President of the Supreme People’s Court of the PRC and the Hong Kong Secretary for Justice signed a brief Record of Meeting, setting out a consensus on the mutual recognition of and assistance to insolvency proceedings between the Mainland China and Hong Kong.

Overview

On 12 May 2021, the High Court sanctioned three inter-conditional restructuring plans, under the Part 26A of the Companies Act 2006, for certain English subsidiaries of the Virgin Active group, despite major opposition of certain landlords.[1] In the landmark decision, the High Court exercised its discretion to cram-down multiple classes of dissenting landlords in each plan, compromising their claims.