Introduction
In May 2021, a cooperation mechanism between Hong Kong and the Mainland on recognition of and assistance to cross border insolvency proceedings (“Cooperation Mechanism”) was implemented. “The Supreme People’s Court’s Opinion on Taking Forward a Pilot Measure in relation to the Recognition of and Assistance to Insolvency Proceedings in the Hong Kong Special Administrative Region” (“SPC Opinion”) was further issued to facilitate the implementation of the Cooperation Mechanism.
Recently on 25 January 2022, in the landmark decision of (2021) 粤03认港破1号, the Shenzhen Intermediate People’s Court (“Shenzhen Court”) approved the first ever application for recognition of and assistance to Hong Kong insolvency proceedings.
Brief facts
Samson Paper Company Limited (“Company”) was incorporated in Hong Kong and went into creditors’ voluntary liquidation in August 2021. The Company had substantial assets in the Mainland including Shenzhen.
In order to deal with the Company’s assets in the Mainland, the liquidators – pursuant to the SPC Opinion – applied to the High Court of Hong Kong for issuing a letter of request to the Shenzhen Court for recognising and assisting the liquidators. The application was granted in Re Samson Paper Co Ltd [2021] HKCFI 2151 in Hong Kong and the letter of request was accordingly issued to the Shenzhen Court.
The Shenzhen Court’s decision
The Shenzhen Court first considered the issue of jurisdiction and held that it had jurisdiction over the application because Shenzhen was the Company’s main location of assets in the Mainland.
The Shenzhen Court then acceded to the letter of request, recognising both the Hong Kong insolvency proceedings of the Company and the status of its liquidators.
Takeaway points
With this first ever case where a Mainland court recognised and assisted liquidators appointed by the Hong Kong High Court, given the close business connections between Hong Kong and Mainland, it is expected that a growing number of applications by Hong Kong liquidators for recognition and assistance in the Mainland Courts under the Cooperation Mechanism will be seen in the future.
Our Hung’s litigation team is equipped to assist clients in applying to the High Court of Hong Kong, through our association with AllBright Law Offices, to obtain the recognition of and assistance to Hong Kong insolvency proceedings in the Mainland Courts.
Please contact our Partner, Ms Milly Hung, or Senior Associate, Mr Michael Lau, for any enquiries or further information.
This article is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage.