In the landmark case of Re China Huiyuan Juice Group Limited [2020] HKCFI 2940, Mr Justice Harris recalibrated the Hong Kong winding-up jurisdiction and its application to an offshore incorporated, Hong Kong-listed entity.

In particular, the decision explains why the Hong Kong court may be unable to wind-up an offshore incorporated, Hong Kong-listed company where all of the company’s operating assets are in the Mainland.

The Material Facts

In the recent decision of Polyline Development Ltd v Ching Lin Chun and Others [2021] HKCFI 483, Mr Recorder Manzoni SC struck out the Plaintiff’s statement of claim and action on a number of grounds. At para. 9 of the judgment, the learned Recorder highlighted the length of the submissions and evidence put forward by the parties, before remarking that “it may be thought that if such voluminous material is necessary in order to persuade the court that the claim is obviously unsustainable, the application is somewhat ambitious”

On March 19, in a matter of first impression, the Third Circuit Court of Appeals (Court) held that triangular setoff is not permissible in bankruptcy due to Bankruptcy Code Section 553(a)’s mutuality requirement, and that parties cannot evade that requirement by contracting around it. See In re Orexigen Therapeutics, Inc., 990 F.3d 748 (3d Cir. 2021).

Hot on the heels of a trio of decisions concerning offshore provisional liquidation, which opened a new and commendable era for Hong Kong’s cross-border insolvency regime (see https://dvc.hk/en/news/cases-detail/heralding-a-new-and-healthy-era-of-cross-border-insolvency-recognition-in-hong-kong-re-fdg-electric-vehicles-ltd-re-

When is a loan not a loan? The SDNY Bankruptcy Court in In Re: Live Primary, LLC[1] held that a $6 million start-up loan was actually an equity contribution after analyzing the terms of the transaction and the intent of the parties. The court recharacterized the loan as equity given the alleged loan functioned as an equity investment would be expected to function.

Through a trio of decisions, Mr Justice Harris has opened a new and commendable era for Hong Kong’s cross-border insolvency regime. The position under this new era is in brief thus:

First, the Hong Kong court is likely to use the debtor’s centre of main interests (“COMI”) as a yardstick to determine eligibility for recognition and assistance.

In Li Yiqing v Lamtex Holdings Ltd [2021] HKCFI 622, the Companies Court considered whether to put a Bermuda-incorporated company into immediate liquidation in Hong Kong or to adjourn the local winding-up petition to allow restructuring to proceed with the involvement of joint provisional liquidators appointed in Bermuda.

2020 was a transformative year for the consumer financial services world. As we navigated an unprecedented volume of industry regulation, Troutman Pepper leveraged our decades of experience and legal know how to help clients find successful resolutions and stay ahead of the compliance curve.

A bill introduced by Democratic U.S. senators looks to make it easier for Americans to discharge student loans and medical debt. If passed as currently written, the Medical Bankruptcy Fairness Act of 2021 would drastically change the U.S. bankruptcy system by removing certain procedural hurdles that make the bankruptcy process complex and by creating a clearer path to discharging debts that impact millions of Americans.

Public policy, “No-Action” and arbitration clauses, and the substitution of petitioners

Background

Bonds that are traded via clearing houses, such as Euroclear and Clearstream, often contain terms providing that there will be a trustee for the issue, who may be appointed by the participants in the relevant clearing system or by the beneficial owners.