Re: Guangdong Overseas Construction Corporation () (in liquidation) (date of decision: 17 May 2023)

Introduction

On 15 May 2023 (with Reasons for Decision delivered on 18 May 2023), the Companies Court made a winding-up order against Dangdai International Investments Ltd (當代國際投資有限公司) (“the Company”) which is in turn wholly owned by Wuhan Dangdai Science & Technology Industries (Group) Company Ltd (武漢當代科技產業集團股份有限公司) (“Wuhan Dangdai”).

The High Court recently issued its ruling in the matter of Re Avanti Communications Limited (in administration). It is the first major case since the pivotal 2005 House of Lords decision of Re Spectrum Plus  to examine the characteristics of fixed and floating charges.

Key points

The Facts – Shortly Stated

Re: GUY KWOK-HUNG LAM [2023] HKCFA 9 (date of decision: 4 May 2023)

Introduction

In the recent decision in Re Guy Kwok-Hung Lam, the Hong Kong Court of Final Appeal set out the proper approach to a bankruptcy petition where the parties had agreed to submit to the exclusive jurisdiction of a specified foreign court.

在终审法院最新颁布的 Re Guy Kwok-hung Lam[2023] HKCFA 9突破性裁决中，终审法院驳回了该案的上诉，并且在判词中就专属管辖权条款（EJC）是否对提交破产呈请有影响这一棘手问题作出裁决，平息了长期对于相关议题的争论。

简而言之，终审法院认可上诉法院大多数法官对于本案的观点，认为一般来说，如果呈请债务的基础争议受制于专属管辖权条款，除非有其他反面因素存在（例如债务人破产的风险将会影响第三方、债务人的呈请以几乎无意义的争议为基础，或者发生滥用法律程序的情况等）， 则法院应驳回该破产呈请。

终审法院在裁定中指出，当只有一名债权人提出破产呈请，而没有证据表明全体债权人都面临风险时，破产制度背后的公共政策因素的重要性则显着降低。

这一裁定反映了法院非常重视当事人自治的原则，以及当事人之间自由达成的协议。该判决将会对破产领域产生深远的影响，以及对处理清算及破产呈请中的仲裁条款产生涟漪效应。

In the latest ground breaking decision in Re Guy Kwok-hung Lam[2023] HKCFA 9, the Court of Final Appeal dismissed the appeal and laid to rest a long-standing debate on the vexing question concerning the impact, if any, exclusive jurisdiction clauses (EJCs) have on the presentation of bankruptcy petitions.

In the tenth edition of Going concerns, Stephenson Harwood’s restructuring and insolvency team covers the innovative attempt by a distressed company to shut out low-valued creditors in a scheme of arrangement, the utility of the Singapore recognition of foreign insolvencies regime to assist international liquidations, and the factors which the Singapore Courts will consider when deciding whether to stay a bankruptcy application. It has been a pleasure preparing these articles over the past five years and a big thank you to our readers!

Content

In the current times of financial stress, a borrower seeking to renegotiate or refinance existing financing arrangements may be asked by its lender to enhance or refresh its security package through the grant of a new floating charge.

The question of whether a floating charge can be avoided due to section 245 of the Insolvency Act 1986 ("IA 1986") can arise in such a context.

Void floating charges under section 245 of the IA 1986

When an Event of Default is "continuing" is not defined or addressed in the ISDA Master Agreement. Until now it does not appear to have been expressly considered in case law either.