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In 2016, the insolvency and bankruptcy landscape in India was radically overhauled by the introduction of the new Insolvency and Bankruptcy Code (IBC). In addition to consolidating the complex set of existing laws and regulations on insolvency and bankruptcy into a single law, the IBC introduced time bound and creditor driven resolution process for distressed companies overseen by the newly formed National Company Law Tribunal (NCLT).

On 8 February 2018, the Hong Kong Court of First Instance (the “Hong Kong Court“) ruled that the common law power to recognise and assist foreign insolvency proceedings extends to voluntary liquidations – this is the first authority on this issue in Hong Kong.

Case: IN THE MATTER of an application for recognition and assistance by the Joint Liquidators of Supreme Tycoon Limited (in liquidation in the British Virgin Islands) [2018] HKCFI 277

In a judgment handed down on 9 June 2015, the High Court of Singapore has for the first time approved a litigation funding arrangement for the benefit of a company in liquidation.

Summary

The key points arising from the judgment are:

Debt exchanges have long been utilized by distressed companies to address liquidity concerns and to take advantage of beneficial market conditions. A company saddled with burdensome debt obligations, for example, may seek to exchange existing notes for new notes with the same outstanding principal but with borrower-favorable terms, like delayed payment or extended maturation dates (a "Face Value Exchange"). Or the company might seek to exchange existing notes for new notes with a lower face amount, motivated by discounted trading values for the existing notes (a "Fair Value Exchange").

In a judgment handed down on 6 March 2013, the Hong Kong High Court elaborated on the guiding principles the court will follow when determining whether or not it should exercise its 'exorbitant' jurisdiction to wind up an unregistered overseas company 'which prima facie is beyond the limits of territoriality'.

One of the primary fights underlying assumption of an unexpired lease or executory contract has long been over whether any debtor breaches under the agreement are “curable.” Before the 2005 amendments to the Bankruptcy Code, courts were split over whether historic nonmonetary breaches (such as a failure to maintain cash reserves or prescribed hours of operation) undermined a debtor’s ability to assume the lease or contract.

The Hong Kong Government has recently released the conclusions to its public consultation on the proposed corporate rescue procedure and insolvent trading laws. The consistent theme throughout the conclusions paper is that the Government will propose practical compromises in order to overcome the contentious issues that have stalled previous efforts to introduce a statutory regime to facilitate corporate restructurings.