A NEW ERA IN JUDICIAL COOPERATION: RECOGNITION AND ASSISTANCE IN CROSS-BORDER INSOLVENCY
Insolvency proceedings have become increasingly global and complex, spread out over a wide network of jurisdictions. As a result, multi-fora proceedings are becoming more the norm than the exception. This is particularly true in jurisdictions like Hong Kong, which is frequently the centre of business for Chinese and international companies that are incorporated overseas, such as offshore islands.
Hong Kong is not a signatory to the UNCITRAL Model Law on Cross-Border Insolvency, nor has it otherwise adopted a local statutory recognition regime. The power of Hong Kong courts to recognise and assist foreign liquidators or overseas courts in insolvency proceedings thus derives from the common law. However, positive legal developments have been made between Hong Kong and Mainland Chinese courts, to respectively assist the liquidators appointed in the other jurisdiction. These developments have already proven to be successful.
Seeking judicial assistance
Often a company that is about to be wound up is incorporated outside of Hong Kong but has some or all of its assets located in Hong Kong. A petition is then granted for a winding-up order in the company’s place of incorporation and liquidators, or provisional liquidators, are appointed. The appointed liquidators may then find that they need to carry out their duties or perform certain functions in Hong Kong. As a result, foreign liquidators may apply to Hong Kong courts to recognise foreign insolvency proceedings, their appointment and seek other judicial assistance from Hong Kong courts.
Jul-Sep 2022 issue
Quinn Emanuel Urquhart & Sullivan LLP