10 September 2021
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Before 14 May 2021, there was no procedure between Mainland China and Hong Kong for mutual recognition of insolvency processes. This situation changed on 14 May 2021. The Supreme People’s Court and the Secretary for Justice signed two documents, namely Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region and Mutual Recognition of and Assistance to Bankruptcy (Insolvency), and the Supreme People’s Court’s Opinion on taking forward a pilot measure in relation to Recognition and Assistance to Bankruptcy (Insolvency) Proceedings in the Hong Kong Special Administrative Region (the “Supreme People’s Court’s Opinion”), which established a cooperation mechanism (the “Cooperation Mechanism”).
Under the cooperation mechanism, the Mainland and Hong Kong jurisdictions agreed to the terms that several cities, such as Shanghai, Shenzhen and Xiamen in the Mainland and Hong Kong would mutually recognize and assist each other in matters regarding insolvency.
The first application made in accordance with the Cooperation Mechanism was in Re Samson Paper Company Limited [2021] HKCFI 2151. In the case, the Court of First Instance opined that formal recognition by the Shenzhen Intermediate People’s Court would be the first occasion on which a court in the Mainland has formally recognized and assisted a liquidator appointed by the Hong Kong High Court.
The Re Samson Paper Company Limited case stipulates the procedure for an application by a Hong Kong liquidator. Article 6 of the Supreme People’s Court’s Opinion provides that a Hong Kong liquidator shall submit the following documents:
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A written application;
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A letter of request for recognition and assistance issued by the High Court of Hong Kong;
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The relevant documents on the commencement of the Hong Kong Insolvency Proceedings and in relation to the appointment of the Hong Kong Administrator;
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Materials evidencing that the debtor’s centre of main interests is in the Hong Kong Special Administrative Region, and if any of such materials was acknowledged outside the Mainland, it shall be certified according to the laws of the Mainland;
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A copy of the document evidencing a successful application for recognition and assistance;
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A copy of the identity document of the administrator in Hong Kong and if such document was acknowledged outside the Mainland, it shall be certified according to the laws of the Mainland; and
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Documentary proof showing that the debtor’s principal assets in the Mainland are located in a pilot area, or that it has a place of business or a representative office in a pilot area.
Furthermore, the Court of First Instance held that the Hong Kong court has inherent jurisdiction to grant letters of request to permit Hong Kong liquidators to seek recognition and assistance in other jurisdictions.
For further information, please contact:
Hugo Sze-To, Hauzen LLP
hugoszeto@hauzen.hk
