Executive Summary

Nuo Ji, Lingqi Wang, Jessica Li and Sylvia Zhang, Fangda Partners

This is an extract from the 2025 edition of GRR's The Asia-Pacific Restructuring Review. The whole publication is available here.

When a company files for bankruptcy, its creditors often ask the same question: will I get paid? The answer, in part, depends on the priority and proposed treatment of each creditor's claim in the bankruptcy (i.e., who gets paid and in what order).1 In addition to the Bankruptcy Code's other provisions affecting the priority of a claim, the doctrines of recharacterization and equitable subordination can affect the priority of a challenged claim by effectively postponing or eliminating payment on the claim.

Recharacterization

Notwithstanding that the requisite statutory majority was obtained in the relevant creditors’ scheme meeting, the Hong Kong Companies Court refused to sanction a scheme of arrangement propounded by a company that professed to be insolvent in a recent judgment [2024] HKCFI 2216.

The A&O Shearman team, together with counsel Michael Lok and Jasmine Cheung, acted for the opposing creditor in these Scheme proceedings.

The Cayman Islands team obtained what may be the first instance of a permanent stay of an official liquidation of a Cayman Islands company.

Few would disagree that when a company is placed in official liquidation, that is the penultimate step before the company's death. Official liquidators will realise the company's assets and distribute them to stakeholders, before the company's eventual, but inevitable dissolution.

But does official liquidation have to be the end of the company? Can anything be done to halt the march towards dissolution?

And so, we continue the tale with the TIBs now triumphantly holding both the hard-won exequatur which expressly recognised the bankruptcy order and Trustee in Bankruptcy (TIB) and confirmed that all rights and powers were enforceable in France and judgment of the French criminal court which restored the seized criminal assets to the TIBs under the vesting provisions of the Insolvency Act 1986. However, there were still clear and untested differences to obtaining automatic recognition under the EU Regulation on Insolvency proceedings (as Recast) (RIR).

Notwithstanding that the requisite statutory majority was obtained in the relevant creditors’ scheme meeting, the Hong Kong Companies Court refused to sanction a scheme of arrangement propounded by a company that professed to be insolvent in a recent judgment [2024] HKCFI 2216.

The Technology and Construction Court recently delivered helpful judicial guidance on when an insured’s cause of action under an the NHBC ‘Buildmark Choice’ policy, providing cover for contractor insolvency before practical completion arises.

Inter-Pacific Petroleum Pte Ltd (in liquidation) v Goh Jin Hian [2024] SGHC 178

In what could be seen as a wake-up call, the High Court of Singapore clarified the scope of director’s duties in Singapore, emphasizing the minimum standard of care required.

Background

The German Federal Court of Justice (the Federal Court) has considered whether a so-called "weak" preliminary insolvency administrator, entrusted to continue business operations with the management during the preliminary proceeding, may take actions in the interest of these operations, where it is unclear whether the debtor has discontinued the business.

Background