Special Report
Hong Kong Court Recognises Mainland Chinese Reorganisation Proceedings For The First Time.

November, 2021

 

Hong Kong Court Recognises Mainland Chinese Reorganisation Proceedings For The First Time.

 

 

The very first case that the Hong Kong Court recognised and granted assistance to bankruptcy administrators appointed by the Mainland Chinese courts in insolvency proceedings commenced in Mainland China in Re CEFC Shanghai International Group Limited [2020] HKCFI 167. Following the latest developments in the insolvency and restructuring regime,  the Hong Kong Court has made further strides towards the enhanced cross-border restructuring cooperation in Re HNA Group Co Limited [2021] HKCFI 2897, in which the Honourable Mr. Justice Harris recognised Mainland Chinese reorganisation proceedings for the very first time (the “Decision”).


Background


HNA Group Co Limited (the “Company”), a company incorporated in Hainan, China, is the holding company of the HNA Group, a Chinese conglomerate with a portfolio spanning sectors including aviation, real estate, tourism, and financial services.  Although it was one of the most active investment groups of the world at one point, the group was brought to its knees in 2021 when it declared bankruptcy pursuant to failed debt restructuring efforts.  An application was made by the Bank of Hainan Company Limited to the Hainan Province Higher People’s Court (the “Hainan Court”) seeking bankruptcy reorganisation of the Company on insolvency grounds.  


Pursuant to the Enterprise Bankruptcy Law and the Provisions of the Supreme People’s Court, an Order for reorganisation was made by the Hainan Court on 10 February 2021 (the “Hainan Recognition”).  Administrators, including Beijing-based lawyers and an officer of the Hainan Province Legal Administrative Office, were appointed to comprise the Administrator.  The same Order provided that certain members of the Company’s group may continue to manage its assets and business affairs, subject to the powers of the Administrator.


An application was made by the Administrator to the Hainan Court for a letter of request to be made to the Hong Kong Companies Court seeking the recognition of the Hainan Recognition, to assist the Administrator in Hong Kong.  

 

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