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

Introduction

On June 23, 2011, the US Supreme Court issued a narrowly-divided decision in Stern v. Marshall, limiting Bankruptcy Court jurisdiction over certain types of claims. The Court found that while the Bankruptcy Court was statutorily authorized to enter final judgment on a tortious interference counterclaim (as a core proceeding under 28 U.S.C. § 157(b)(2)(C)), it was not constitutionally authorized to do so.

On February 7, 2011 the United States Court of Appeals for the Second Circuit issued its eagerly awaited opinion in the consolidated appealIn re: DBSD North America, Inc., Docket Nos. 10-1175, 10-1201, 10-1352, 2010 U.S. App. LEXIS 27007.