In the recent case of Re Joint and Several Liquidators of Ozner Water International Holding Ltd 浩澤淨水國際控股有限公司 (In Liquidation) [2022] HKCU 940, the Hong Kong Court of First Instance (Hong Kong Court) granted an application by the liquidators (Liquidators) of Ozner Water International Holding Ltd. (Company) for a letter of request for recognition and assistance (Letter of Request) to be issued to the Shenzhen Intermediate People’s Court (Shenzhen Court).

In the landmark decision in case (2021)粤03认港破1号(2021) Yue 03 Ren Gang Po No. 1 (Shenzhen Court Decision), the Shenzhen Intermediate People’s Court (Shenzhen Court) ordered formal recognition in Mainland China of liquidators appointed by the Hong Kong Court of First Instance (Hong Kong Court) over Samson Paper Company Limited (Company) to permit the liquidators to exercise powers over the Company’s assets located in Mainland China.

The decision raises new questions about whether cross-border insolvency recognition and assistance between mainland China and Hong Kong will be a two-way street.

A restructuring plan completed earlier this year by Smile Telecoms notches up a number of firsts.

African telecommunications provider Smile Telecoms Holding Limited, incorporated in Mauritius, successfully completed a restructuring plan (the Plan) under Part 26A of the UK Companies Act 2006 at the end of March 2021.

The Plan features a number of novel actions, including:

Latham & Watkins operates worldwide as a limited liability partnership organized under the laws of the State of Delaware (USA) with affiliated limited liability partnerships conducting the practice in France, Hong Kong, Italy, Singapore, and the United Kingdom and as an affiliated partnership conducting the practice in Japan. Latham & Watkins operates in South Korea as a Foreign Legal Consultant Office. Latham & Watkins works in cooperation with the Law Office of Salman M. Al-Sudairi in the Kingdom of Saudi Arabia.

The reforms, which are the result of the transposition of the EU’s Restructuring Directive, should come into force in October.

Key Points:

The decision provides new judicial guidance for determining the boundaries of cross-class cram down tests. 

On 28 June 2021, the High Court declined to sanction a restructuring plan proposed by Hurricane Energy plc (Hurricane), an AIM listed oil drilling company, under Part 26A of the Companies Act 2006 (Act). The plan would have seen shareholders diluted to 5% of Hurricane’s equity, with the remaining 95% issued to bondholders as consideration for a partial debt-for-equity swap. 

The ruling confirmed that Section 423 of the Insolvency Act 1986 has extensive international reach, and does not require a transaction at an undervalue to leave the debtor with insufficient assets.

Background

The decision confirms that company voluntary arrangements remain a flexible tool for restructuring leasehold portfolios.

• No rigid test exists for “basic fairness” that requires a landlord to receive at least market rent, or that contractual rent should be interfered with to the minimum extent necessary.

• If a landlord is entitled to terminate the lease and receive a better outcome than in the alternative, any automatic unfairness from changes to the terms of the lease is negated.

• Whether a CVA is unfairly prejudicial depends on all the circumstances of the case.

Landmark decision holds that the SFO does not have the power to procure documents from foreign companies outside the jurisdiction.