Hong Kong's insolvency system is famous for its lack of statutory corporate rescue procedure ("CRP"). Owing to the lack of CRP, financially distressed companies may only recourse to rescue their business with (i) a non-statutory consensual agreement with major creditors to restructure debts, or (ii) a scheme of arrangement under the Companies Ordinance (Cap. 622). These options, however, have many problems such as being expensive, impracticable, inflexible and tedious.

Introduction

In April 2005, the Bankruptcy Abuse Prevention Consumer Protection Act (“BAPCPA”) was signed into law, representing the most extensive revisions to the bankruptcy code in 35 years. The BAPCPA was the product of more than a decade of legislative efforts. Its stated purpose was to curb perceived consumer abuse of the bankruptcy system. At the time of its enactment, many bankruptcy practitioners, judges and others questioned whether such a drastic change to the law was necessary and expressed concern about the impact the BAPCPA would have on consumers and the system as a whole.