Mutual Recognition of Insolvency Proceedings between China’s Mainland and HK
The Supreme People’s Court of the PRC and the government of the Hong Kong SAR signed a Record of Meeting on Mutual Recognition of and Assistance to Bankruptcy or Insolvency Proceedings between the Courts of the Mainland and the Hong Kong SAR on 14 May 2021, which signified the consensus on the recognition of and assistance to bankruptcy or insolvency proceedings between the two places. Liquidators from Hong Kong may apply to the courts of the mainland for recognition of insolvency proceedings in Hong Kong. And bankruptcy administrators from the mainland may apply to the High Court of Hong Kong for recognition of bankruptcy proceedings in the mainland.
- According to the consensus reached by both parties, the Supreme People’s Court formulated the Opinion on Carrying out a Pilot Measure in Relation the Recognition of and Assistance to Bankruptcy or Insolvency Proceedings in Hong Kong SAR. The main contents of the opinion are as follows:
- The courts designated to carry out the pilot measure are the relevant Intermediate People’s Courts in Shanghai, Xiamen and Shenzhen.
(1)
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At the date of application, the debtor’s center of main interest shall have been in Hong Kong for more than 6 consecutive months. The center of main interest generally refers to the place of registration of the debtor.
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(2)
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The debtor has principal assets, a place of business in the pilot cities, or a representative office in the pilot cities.
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(3)
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The Hong Kong insolvency proceedings must be compulsory winding up, creditors?voluntary winding up or restructuring proceeding initiated by a liquidator or provisional liquidator and approved by the High Court of Hong Kong.
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- Hong Kong liquidators who meet the following conditions may apply for recognition and assistance from the courts in the pilot cities:
After the Hong Kong insolvency proceedings has been recognized, it will have the same effect as the commencement of bankruptcy proceedings in the mainland, including but not limited to the prohibition of payment to individual creditors, suspension of ongoing litigation, arbitration and execution procedures, and lifting of measures for preserving the property of debtors.
At the same time, the Department of Justice of Hong Kong SAR has also formulated and issued a Practical Guide on the Procedures for a Mainland Administrator’s Application to the Hong Kong SAR Court for Recognition and Assistance. An administrator in the mainland bankruptcy proceedings may apply to the High Court of Hong Kong for recognition of bankruptcy liquidation, reorganization and compromise proceedings under the Enterprise Bankruptcy Law of the PRC, recognition of his office as an administrator and grant of assistance of discharge of his duties as an administrator in accordance with the Practical Guide.
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