RE ANDO PAVES THE WAY FOR A LONG-AWAITED TEST CASE, WHICH HAS EMERGED AT A TIME WHEN A PROPOSED FRAMEWORK FOR COOPERATION BETWEEN COURTS IN HONG KONG AND MAINLAND CHINA IN CROSS-BORDER CORPORATE INSOLVENCY MATTERS IS IN DEVELOPMENT.
In Re Ando Credit Limited  HKCFI 2775 (“Re Ando”), the Hong Kong Companies Court recently appointed provisional liquidators over a Hong Kong company, Ando Credit Limited, in novel circumstances with potentially significant consequences. According to the Court’s written reasons dated November 11, 2020 (published in light of the unprecedented nature of the decision), the provisional liquidators were appointed at a hearing on October 23, 2020, for the express purpose of enabling them to seek recognition in Mainland China to facilitate the recovery of very substantial receivables owed to the company by Mainland China-based debtors.
Earlier this year, prior to Re Ando, the Hong Kong Companies Court recognized Mainland China-appointed insolvency officeholders for the first time.1 With the growing number and significance of corporate bankruptcies in Mainland China, one important but unanswered question for international investors and the restructuring community is whether courts in Mainland China are willing and able to reciprocate by recognizing and granting assistance when needed to insolvency officeholders appointed in Hong Kong. Re Ando paves the way for a long-awaited test case, which has emerged at a time when a proposed framework for cooperation between courts in Hong Kong and Mainland China in cross-border corporate insolvency matters is in development.
THE CURRENT CROSS-BORDER RECOGNITION FRAMEWORK
At the outset, we note that neither Hong Kong nor Mainland China has adopted the UNCITRAL Model Law on Cross-Border Insolvency (“Model Law”), an international framework for determining cross-border insolvency matters that has so far been adopted by 51 jurisdictions around the globe,2 although the Hong Kong government has commissioned a consultancy study on the feasibility of adopting the Model Law.
In fact, Hong Kong has no statutory framework at all for dealing with cross-border insolvency matters. Instead, in recent years, the Hong Kong courts have adopted and developed the following core common law principles:
1. The court can recognize collective insolvency proceedings (being a process of collective enforcement of debts for the benefit of the general body of creditors) commenced in a company’s place of incorporation outside Hong Kong.
2. The court can also grant assistance in Hong Kong to overseas insolvency officeholders in a recognized foreign insolvency proceeding.
3. The court’s power to grant assistance is only available to the extent necessary for the performance of an overseas insolvency officeholder’s functions and cannot enable the officeholder to do something that he or she could not do under the laws of the jurisdiction in which he or she was appointed. An overarching requirement is that an order granting assistance must be consistent with the substantive law and public policy of Hong Kong.
Under these common law principles, insolvency officeholders appointed in Australia, Bermuda, the British Virgin Islands, the Cayman Islands and Japan have been recognized and granted assistance in Hong Kong. Significant strides towards enhanced cooperation between Hong Kong and Mainland China in corporate insolvency matters were taken earlier this year when, for the first time in the CEFC case, Mainland China was added to this list.
Continue reading your story on the app
Continue reading your story in the magazine
JOINT VENTURE TRANSACTIONS
NEW ARBITRATION RULES
PUBLISHED BY THE LONDON COURT OF INTERNATIONAL ARBITRATION (LCIA) AND INTERNATIONAL CHAMBER OF COMMERCE (ICC)
M&A in the time of COVID and beyond
What is clear for those engaging in cross-border M&A is that countries around the world are becoming increasingly protective of their economies and industries, with new rules being introduced and existing rules being more widely applied
SWITZERLAND A DIFFERENTIATED APPROACH TO FRAUD
Swiss law interprets the offense of fraud in a special way where in addition to the characteristics of deception and damage as known in many jurisdictions, a qualified lie, i.e. a malicious approach, is required
JOINT VENTURE DISPUTES MEDIATING
Mediation has shown itself to be a powerful tool for bringing a speedy and effective end to crossborder disputes while preserving the commercial relationship between them.
Recognition of HONG KONG INSOLVENCY PROCEEDINGS IN MAINLAND CHINA
A TEST CASE IN THE MAKING?
CONFIDENTIALITY IN ARBITRATION: RECENT DEVELOPMENTS IN SINGAPORE
Two recent developments in Singapore case law and legislation reflect a willingness to preserve confidentiality related obligations in all arbitrations
ESSENTIAL GOODS SERVICES UNDER IBC
WHAT DOES IT ESSENTIALLY MEAN?
A BIDEN ADMINISTRATION'S NEW VISION FOR THE AMERICAN WORKPLACE
A LOOK AT THE KEY CHANGES PRESIDENT-ELECT BIDEN IS LIKELY TO MAKE ONCE HE TAKES OFFICE
If You Think Positive Covid Is A Big Opportunity
Senior Vice President and Head of Legal, ESSAR CAPITAL, Badrinath Durvasula, holds forth on his professional journey, the essence of leadership, working from home, books and more…
China to Send 3 Male Astronauts to Its Space Station in June
A three-man crew of astronauts will blast off in June for a three-month mission on China’s new space station, according to a space official who was the country’s first astronaut in orbit.
CHINA SAYS XIAOMI REMOVAL FROM U.S. BLACKLIST “BENEFICIAL”
China’s commerce ministry on Thursday welcomed the removal of Xiaomi Corp. from a U.S. government blacklist, a day after the U.S. reversed a ban on U.S. investments in the smartphone maker that was imposed under former President Donald Trump.
China's Next Export: Inflation
With prices rising at the factory gate, consumers abroad may wind up paying more
Reincarnation And Realpolitik
China, India, and the U.S. are vying to influence the selection of the next Dalai Lama
DEADLY WUHAN COVER-UP!
U.S. health officials untangling how virus escaped secret bio lab
US, CHINA CONSULTED ON SAFETY AS THEIR CRAFTS HEADED TO MARS
As their respective spacecrafts headed to Mars, China and the U.S. held consultations earlier this year in a somewhat unusual series of exchanges between the rivals.
CHINA CUTS TAXES TO SPUR SEMICONDUCTOR DEVELOPMENT
China announced tax breaks this week to spur growth of its semiconductor industry following U.S. sanctions that alarmed the ruling Communist Party by cutting offaccess to American processor chips for tech giant Huawei and some other companies.
CYBER ATTACK TIED TO CHINA BOOSTS DEVELOPMENT BANK'S CHIEF
The cyberattack crested just as finance officials from across Latin America were descending on Washington to commemorate the 60th anniversary of the Inter-American Development Bank.
ENCRYPTED MESSAGING APP SIGNAL BLOCKED IN CHINA
Encrypted messaging app Signal appears to have been blocked in mainland China, the latest foreign social media service to cease working in a country where the government tightly controls the flow of information.
An Industrial Policy With U.S. Characteristics
Biden’s $4 trillion Build Back Better plan faces plenty of hurdles beyond Republicans