24 Jan Hong Kong Government Mulls Changes to Region’s Insolvency Law
Last week’s post (below) covered a recent Chapter 15 petition commenced by Armada (Singapore) Pte. Ltd. in aid of the company’s efforts to effect a scheme of arrangement with its creditors and asked whether – had Armada’s “home jurisdiction” been Hong Kong rather than Singapore – the company’s efforts to protect US-based assets might have warranted a different approach in US courts.
This week brings fresh news from Hong Kong – this time about a possible change in that region’s insolvency law. As reported by Bonnie Chen and Patsy Moy in the Hong Kong Standard:
The government is considering reintroducing a corporate rescue bill – shot down by the Legislative Council eight years ago – to help companies with short-term financial difficulties but viable long-term prospects ride out the financial tsunami . . . . The measure, first proposed in 2001, is similar to the United States’ Chapter 11 bankruptcy code that is intended to save companies from going bust . . . . [Hong Kong Chief Executive Donald Tsang Yam-kuen] said the rescue procedure would resemble those in place in the United States and Britain that give firms with serious liquidity problems time to restructure their business, secure new funds and find new investors. He said that under current legislation, companies with liquidity problems had no choice but to go into bankruptcy and dispose of their assets. A similar proposal failed to find consensus in 2001 mainly because of some business people, Tsang said, but the time is now ripe for renewing efforts. “The financial tsunami presents an opportunity for all parties concerned to strike a compromise, and resume the necessary legislative work, so as to minimize business closures and job losses,” he said.
How long would such a compromise take? According to the Standard, “[a] bill will be drafted for consultation and the legislative process could take at least a year.”
Even in Hong Kong, and even in current economic conditions, some compromises just take time.