[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN HONG KONG] 57
including its purpose, class composition, disclosure of information to creditors, as well as international dimensions and effectiveness, if any.
An administrator in Mainland bankruptcy proceedings may apply to the High Court of Hong Kong for recognition of bankruptcy liquidation, reorganization and compromise proceedings under PRC Enterprise Bankruptcy Law, recognition of his office as an administrator, and grant of assistance for discharge of his duties. (B) Other Parts of the Mainland China and Other Jurisdictions For regions outside the pilot areas, the Hong Kong Court may apply common law in dealing with recognition of Mainland China-included foreign insolvency proceedings and assistance. The power at common law to recognize and assist foreign office-holder does not depend on winding up proceedings having been commenced against the company in the assisting court, as the Court is asked to recognize the office-holder appointed in the place of incorporation as the lawful agent in accordance with principle of private international law. In principle, common law supports recognition and assistance if the foreign insolvency proceedings are collective, conducted in the jurisdiction in which the company’s centre of main interest is located, and if assistance is necessary and consistent with the substantive law and public policy of the assisting court. As to the extent and terms of assistance, the Hong Kong Court has granted assistance to a foreign office-holder to take control of the assets of the company, to stay the local proceedings against the assets of the company and to obtain and gather information and documents relating to the company from third parties. (8) Conclusion Hong Kong, being an international financial centre and an international dispute resolution centre, has established a statutory and common
(B) Advantages Rehabilitative
options commercially advantageous as they reduce hostility and foster the understanding between debtors and creditors on the repayment potential. are Specifically, creditors and debtors are allowed to retain control on the repayment plan in a consensual manner, and if possible, collaborate on the future of the business on a going concern. There is a further advantage on perceptions. In many occasions, confidentiality of business dealings can be preserved. Moreover, compared with insolvency, whether compulsory or voluntary, rehabilitative options do not carry the cultural stigma attached to insolvency individuals or entities. (7) Mutual Assistance and Recognition with Other Jurisdictions (A) Pilot Areas in the Mainland China Under a Cooperation Mechanism between the Supreme People’s Court of Mainland China and the Government of Hong Kong SAR, several cities were designated as pilot areas (including Shanghai, Xiamen and Shenzhen) where their Intermediate People’s Court may initiate cooperation with the Hong Kong Court on mutual recognition of and assistance to bankruptcy proceedings. A liquidator or provisional liquidator in insolvency proceedings in Hong Kong may apply to such Courts in the pilot areas for recognition of compulsory winding up, creditor’s voluntary winding up and corporate debt restructuring proceedings, and grant of assistance for discharge of his duties.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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