Introduction
A new cooperation arrangement for mutual recognition of and assistance to cross-border corporate insolvency and debt restructuring proceedings has been established between Mainland China and Hong Kong (the Cooperation Arrangement).
The Cooperation Arrangement is provided in a Record of Meeting on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region (the ROM) signed by the Mainland’s Supreme People's Court (SPC) and Hong Kong’s Department of Justice on 14 May 2021.
In brief
On 14 May 2021, the Supreme People’s Court (SPC) and the Hong Kong government agreed a framework (“Framework”) for judicial cooperation in corporate insolvency and debt restructuring. Under the Framework:
In Re China Huiyuan Juice Group Limited [2020] HKCFI 2940, Harris J discussed in detail the difficulties which liquidators appointed in Hong Kong over a foreign incorporated holding company may have in obtaining control of operating subsidiaries in the Mainland, if the group’s structure includes intermediate subsidiaries incorporated in the British Virgin Islands (the “BVI”).
In brief
On 14 May 2021, the Supreme People's Court of the PRC (SPC) and the Government of the Hong Kong Special Administrative Region (HKSAR) signed a Record of Meeting setting out a framework to facilitate the mutual recognition of and assistance to insolvency proceedings between Mainland China and Hong Kong ("Arrangement"). The Record of Meeting is supplemented by the SPC's Opinion and the HKSAR Government's Practical Guide, which together provide the "Framework".
Hsin Chong Construction Company Limited (in liquidation) v Build King Construction Limited [2021] HKCFA 14 (judgment dated 13 May 2021)
Introduction
On 14 May 2021, Hong Kong’s Secretary for Justice and the Vice-President of the Supreme People’s Court (SPC) signed a record of meeting concerning mutual recognition of and assistance to insolvency proceedings between the courts of Mainland China and Hong Kong (Record of Meeting), which signifies the consensus on the mutual recognition of and assistance to insolvency proceedings between the two jurisdictions in accordance with the principle of reciprocity and with a view to promoting closer cross-border judicial cooperation on insolvency matters.
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Initial arrangements have been put in place for mutual recognition and assistance to be provided by courts in Mainland China and Hong Kong in respect of corporate insolvency proceedings. This is a significant and long awaited development which could substantially enhance the ability for cross border insolvencies and restructurings to be administered and implemented across the two jurisdictions.
On 14 May 2021, the Government of HKSAR and the Supreme People's Court signed the "Record of Meeting of the Supreme People's Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region" which effects a cooperation mechanism for Hong Kong liquidators and Mainland administrators to seek mutual recognition and assistance.