UNDERSTANDING CROSS BORDER INSOLVENCY IN HONG KONG’S CONTEXT

The research work would like to discuss today some of the more important issues that have arisen in
recent years in Hong Kong concerning liquidations and restructuring of foreign incorporated
companies. We are not here concerned with the simple case of an insolvent business conducted solely
in Hong Kong through the medium of a company incorporated in, say, the British Virgin Islands
because of its owner's preference for an opaque business structure. Such cases pose no difficulties.
For reasons that will become apparent later, a winding-up order can readily be justified.
The concern of the research work is more complex cases, which have come before the Companies
Court with increasing frequency in recent years. A typical case would be this: a business group whose
principal commercial activities take place in the Mainland decides to list in Hong Kong. For the
purposes of the listing, a holding company is incorporated in one of the popular Caribbean
jurisdictions. The listing takes place in Hong Kong. The listed company raises funds through an issue
of notes in New York governed by the laws of the State of New York. The company later runs into
financial difficulties. In these kinds of situations, the Court can find itself faced with broadly three
types of applications:

(1) A petition to wind up the company in Hong Kong.

(2) An application for judicial assistance by the court of its place of incorporation in which it is
being compulsorily wound up, for example, an order for the production of documents. Judge of
the Court of First Instance of the High Court, Hong Kong.
(3) The introduction of a scheme of arrangement to restructure the foreign company's debt.

Each type of application gives rise to different issues. The issues are further dealt with in the
research work.The project analysis the cross border insolvency related regime in Hong Kong in
realms of private international law.