Further to sanction of the DeepOcean restructuring plans on 13 January 2021, on 28 January 2021 Mr Justice Trower (Trower, J) handed down his judgment setting out why – for the first time – the court had exercised its discretion to sanction a restructuring plan in the face of a dissenting class of creditors.

The restructuring of Hong Kong Airlines has been approved. It is the first time that a parallel English Restructuring Plan and Hong Kong Scheme of Arrangement have successfully been used to restructure Hong Kong, PRC and English law-governed debts.

For the background to the restructuring and details of the plan and scheme, please see our article here.

In Re Unity Group Holdings International Ltd [2022] HKCFI 3419, the Hong Kong court has for the first time sanctioned a scheme of arrangement that releases debts of third-party obligors that were guaranteed by the scheme company without requiring a deed of contribution. The Honourable Mr. Justice Harris deviated from the English law approach and ruled that a deed of contribution will no longer be necessary for the release of a principal obligor's liability that has been guaranteed by the scheme company.

A going concern

Our review of 2022 brings you right up-to-date with the latest developments in restructuring and insolvency law in Hong Kong and the mainland.

There has been no shortage of distressed airlines over the last 2.5 years as the COVID-19 pandemic and its economic reverberations wreaked havoc across the aviation sector and travel industry alike. Virgin Atlantic Airlines, Norwegian Air, Garuda, Malaysia Airlines (its leasing wing MAB Leasing Limited), AirAsia X and SAS are just some of the airlines to have gone through, or are in the process of, debt restructurings or deployment of asset and liability management strategies.

How did we get here?

The crypto markets were rocked again last week by the collapse and bankruptcy of FTX and Alameda Research. Within a few short days, Sam Bankman-Fried (SBF) and his companies went from a stabilizing force for markets and acting as an industry leader to causing one of the greatest disruptions in digital asset market history.

The High Court of England and Wales has recently provided welcome clarification around the nature of events of default under derivatives contracts governed by the ISDA Master Agreement, in particular in relation to whether an insolvency related event of default can be cured and so cease to be continuing. This brings to an end a long running debate around the extent to which, and for how long, a party can continue to rely on the condition precedent to payment contained in the ISDA framework documentation where the other party is subject to such an event of default.

The 11 October 50-page judgment of Hildyard J in The joint administrators of Lehman Brothers International (Europe) v FR Acquisitions Corporation (Europe) and JFB Firth Rixson will interest not only those who deal with ISDA Master Agreements (who may want to read the entire judgment), but also many lawyers and financial and commercial institutions. This is because the events of default which it had to consider, and especially the meaning of the word “continuing” in this context, are relevant to bonds, loans and various commercial contracts.

The Hong Kong Court of Appeal has confirmed that the court should respect the effect of an exclusive jurisdiction clause in bankruptcy proceedings, just as it does in ordinary civil actions. To do otherwise, it said, it would be illogical.

Die fundamentalen Spannungen, die der Ukraine-Krieg in den Energiemärkten verursacht, hinterlassen bereits jetzt tiefe Spuren bei Industrie und Privathaushalten. Vor allem bei besonders energieintensiven Industrien und Betrieben zeichnen sich bereits erste Produktionsdrosselungen, Produktionsstopps und sogar Insolvenzen ab. So haben jüngst Hersteller von energieintensiven Produkten wie Dünger, Kohlensäure und AdBlue die Produktion gedrosselt oder gleich ganz eingestellt. Mit Görtz und Hakle mussten zudem bereits zwei Unternehmen wegen steigender Energiekosten Insolvenz anmelden.