In Shandong Chenming Paper Holdings Limited v Arjowiggins HKK2 Limited [2022] HKCFA 11, the Court of Final Appeal has confirmed that the "leverage" created by the prospect of a winding-up – as opposed to the making of a winding-up order – provides a legitimate form of "benefit" for the purposes of satisfying the second of the three "core requirements" for winding up a foreign incorporated company in Hong Kong.
A Hong Kong court has stayed a petition presented on the just and equitable ground to arbitration, on the basis of arbitration agreements found within what the petitioner described as quasi-partnership agreements formed in 2007. The court also dismissed claims that the appointed arbitrator lacked the requisite qualifications and experience, and that a stay would lead to further costs and duplication of resources.
For the first time in England & Wales, a court has ordered the winding-up of a listed plc on the grounds of loss of substratum – the abandonment of the company's original main object and purpose. If Hong Kong follows this decision, it would be very welcome to minority shareholders who would have an additional option to retrieve their investment monies from companies that embark on a completely different path to that for which they initially signed up.
In a significant decision, the Shenzhen Intermediate People's Court (Shenzhen court) has ordered formal recognition in the mainland for Hong Kong appointed liquidators. This is the first occasion on which a mainland court has formally recognized and granted assistance to Hong Kong liquidators, expressly granting them powers to deal with assets located in the mainland under the new insolvency co-operation mechanism concluded between Hong Kong and the mainland.
1. State of the Restructuring Market
1.1 Market Trends and Changes
State of the Restructuring and Insolvency Market
There were 27,359 insolvencies in France as of the end of September 2021, down 25.1% from the same period in 2020, and down 47.9% from September 2019. Such reduction is relatively stable across all sectors, including those most severely affected by the health-related restrictions, such as accommodation and food services (down 44.2% year-on-year) and trade (down 28.1% year on year).
Fewer Insolvencies for More Opportunities
At the end of 2021, corporate bankruptcies (for most company sizes and in most sectors) were at their lowest level compared to the pre-COVID-19 figures from 2019, with a 50% drop in insolvency proceedings and a 10% decrease in pre-insolvency situations. This was largely due to the temporary impact of government emergency measures and support, including:
In two recent judgments, the Hong Kong companies court has set out the principles applicable to winding up companies holding operating subsidiaries in the mainland through intermediate subsidiaries incorporated offshore, most commonly in the BVI. In doing so, the Honourable Mr. Justice Harris highlighted the need for the petitioner to demonstrate a "real and discernible benefit" to creditors, something which will be challenging to prove if the company’s centre of main interests is not in Hong Kong.
随着香港及内地就相互认可和协助破产程序及重组事务达成共识，一个新纪元到来了。从今往后，希望通过中国债务人位于香港的财产收回欠款的债权人，或是拥有内地财产的香港运营实体的债权人，终于在谈判桌前享有了话语权。
随着香港及内地就相互认可和协助破产程序及重组事务达成共识，一个新纪元到来了。从今往后，希望通过中国债务人位于香港的财产收回欠款的债权人，或是拥有内地财产的香港运营实体的债权人，终于在谈判桌前享有了话语权。
霍金路伟最新一期《投资中国：法律监管信息速递》专题系列将为您深度探秘下列安排：
Hong Kong and the Mainland have agreed a new co-operation mechanism for cross-border insolvency. Under the agreement, liquidators from Hong Kong may apply to Mainland courts for recognition of insolvency proceedings in Hong Kong, whilst bankruptcy administrators from the Mainland can apply to the Hong Kong High Court for recognition of bankruptcy proceedings in the Mainland.
Hong Kong and the Mainland have agreed a new co-operation mechanism for cross-border insolvency.
In a pair of significant judgments issued on the same day, Re China Huiyuan Juice Group Ltd. [2020] HKCFI 2940 and FDG Electric Vehicles Ltd. [2020] HKCFI 2931, the Honorable Mr. Justice Harris has once again issued highly relevant and timely guidance on key cross-border insolvency issues.