Vol 18 (2021) - Issue 3

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PRC and Hong Kong: One Country, Two Inadequate Restructuring Systems, and an Offshore Solution

Synopsis
The use of offshore holding structures for Mainland businesses listed on the Hong Kong Stock Exchange, and the absence of restructuring regimes in the Mainland and Hong Kong requires attention to be given to the correct court in which to commence the primary proceedings. This court will be the court of the offshore jurisdiction usually Bermuda or the Cayman Islands, both of which have well developed procedures for the appointment of restructuring provisional liquidators and provision for implementation of successful restructuring through schemes of arrangement. The Hong Court has well developed practices and procedures for providing recognition and assistance to offshore court appointed provisional liquidators, and for implementing parallel schemes of arrangement. This is illustrated in four recent cases.