Historically, the common law has only recognised foreign insolvency proceedings commenced in the jurisdiction in which the company is incorporated. This may no longer be the case in Hong Kong. Going forward, a Hong Kong court will now recognise foreign insolvency proceedings in the jurisdiction of the company’s “centre of main interests” (COMI). Indeed, it will not be sufficient, nor will it be necessary, that the foreign insolvency process is conducted in a company’s place of incorporation.

The recent decision in Re The Liquidator of Shenzhen Everich Supply Chain Co, Ltd (in liquidation in the People’s Republic of China) [2020] HKCFI 965 reaffirms the willingness of the Hong Kong Companies Court (the “Companies Court”) to recognise the winding-up of a company in Mainland China and thereby grant recognition and assistance to liquidators appointed in the Mainland.

In a long-awaited development of cross-border insolvency cooperation between Hong Kong and Mainland China, the Hong Kong Court has granted recognition and assistance to Mainland liquidators for the first time in Joint and Several Liquidators of CEFC Shanghai International Group Ltd [2020] HKCFI 167.

Background

The Court of First Instance has recently helpfully summarised the legal position on schemes of arrangement under both Hong Kong law and English law. Notably, it has called for further development in cross-border coordination in order to avoid the trouble of parallel insolvency proceedings and it has raised a red flag in relation to detailed disclosure of restructuring costs: Da Yu Financial Holdings Limited [2019] HKCFI 2531.

In Nicholas Stewart Wood and David John Standish (as the joint trustees in bankruptcy of Karl Eric Watkin) v Kate Rebecca Watkin [2019] EWHC 1311 (Ch), trustees in bankruptcy sought to establish that a bankrupt (theBankrupt) was the sole beneficial owner of three properties (theProperties), ostensibly purchased by him for his adult daughter. The High Court refused the application and held that the Bankrupt was not the sole beneficial owner of the Properties.

On Friday 18 January 2019, Hong Kong and the Mainland reached a milestone by signing the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts of the Mainland and of the Hong Kong Special Administrative Region (“Arrangement“). When taken together with other similar arrangements that are in train, the Mainland Supreme People’s Court envisages that approximately 90% of judgments of a civil and commercial nature will soon be reciprocally recognised and enforced between Hong Kong and the Mainland.

In a highly international cross-border restructuring, the High Court of Hong Kong has refused to assist the New York-based Chapter 11 trustee of a Singaporean subsidiary of the Cayman-incorporated Peruvian business China Fishery Group (“CFG”).

In the first instance decision of Fo Shan Shi Shun De Qu Consonancy Investment Co Ltd v Yat Kit Jong [2017] HKEC 557, the Court took a dim view of a party's conduct in respect of expert directions. It held that the party's failure to properly define the scope of the issues to be covered by the expert was a violation of procedural rules and prejudicial to the opposing party, and as such ordered that the party be penalised on costs.

Facts

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.

In Lockston Group Inc v Nicholas Stewart Wood [2015] EWHC 2962 (Ch), the English High Court held that foreign currency claims and claims for interest in a deceased insolvent's estate should be calculated at the date of death, rather than the date of any insolvency administration order. This case serves as a reminder of the importance of the pari passu principle in insolvency law and the requirement for a single date for ascertaining a deceased insolvent's liabilities.

Facts