Secretary for Justice Teresa Cheng and Vice-president of the Supreme People's Court (SPC) Yang Wanming signed the record of meeting concerning mutual recognition of and assistance to insolvency proceedings between the courts of the Mainland and the Hong Kong Special Administrative Region in Shenzhen today.
The arrangement highlights the unique role enjoyed by the Hong Kong SAR under “one country, two systems”, fostering further legal co-operation in civil and commercial matters.
Ms Cheng said that the record of meeting signified the consensus on the mutual recognition of and assistance to insolvency proceedings between the two places.
Liquidators from Hong Kong may apply to Mainland courts for recognition of insolvency proceedings in Hong Kong. Likewise, bankruptcy administrators from the Mainland may apply to the High Court in Hong Kong for recognition of bankruptcy proceedings in the Mainland.
The framework facilitates the rescue of financially troubled businesses, and provides better protection of the assets of the debtor company as well as the interests of the creditors, and is conducive to the promotion of an orderly and efficient insolvency regime.
The new co-operative framework covers bankruptcy compromise and reorganisation in the Mainland as well as debt restructuring in Hong Kong, encouraging the use of restructuring of debts to revive businesses with a view to reaching consensus among creditors from both places and abroad.
This may open up more opportunities for the debtor company to look for a successful rescue. In the long run, the framework will give additional assurance to investors and further improve the business environment in the Mainland and Hong Kong.
One of the key features of the record of meeting will see the SPC designating several pilot areas where relevant Intermediate People's Courts and Hong Kong SAR courts will commence work on mutual recognition of and assistance in insolvency proceedings in accordance with the laws.
A set of opinion and a practical guide will be issued by the SPC and the Hong Kong SAR Government in respect of their work on the matter. Both sides will continue to maintain close communication for sustained improvement to the mechanism and to gradually extend it beyond the pilot areas.
The SPC has initially designated Shanghai, Xiamen and Shenzhen as pilot cities given their close trade ties with Hong Kong. The three cities are also the popular choices for investments from Hong Kong.
The Shenzhen Intermediate People's Court will hold a forum on legal and practical issues concerning cross-boundary insolvency co-operation between the Mainland and Hong Kong this afternoon. The Department of Justice is the supporting organisation.
Speakers including judges, academics and legal professionals from the Mainland and Hong Kong will take part in discussions covering the scope and the specific procedures for legal assistance in cross-boundary insolvency as well as the key mechanism on legal assistance in cross-boundary insolvency in the Guangdong-Hong Kong-Macao Greater Bay Area.
This will give the audience a better understanding that the co-operative framework helps fully implement the Basic Law and consolidate legal assistance between the two places.
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