Vol 16 (2019) - Issue 2

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CW Advanced Technologies Limited: Hong Kong Moratorium on the Singapore Moratorium

Synopsis

The decision of the High Court of Hong Kong in CW Advanced Technologies Limited1 is an unusual case in that it is more significant for the questions it raises rather than in providing answers. The question is simple enough: is the new Singapore restructuring regime capable of recognition in Hong Kong? However, as Harris J pointed out, the answer is not so simple. Until an answer is forthcoming, insolvency practitioners in Asia involved in the restructuring of pan-Asia businesses need to consider very carefully whether utilising the new Singapore regime is likely to be effective if a Hong Kong business, or Hong Kong listed company is involved.

Introduction

Hong Kong is the third largest stock exchange in Asia and fastest growing. It is on track to be the largest IPO market for 2018. More than half of Hong Kong listed companies are incorporated in the Cayman Islands and a quarter in Bermuda. Although the majority carry on business in China, including PRC, Hong Kong, Macau and Taiwan, a small minority carry on business or are headquartered elsewhere. It is unfortunate therefore that it neither has a statutory restructuring regime as found in the UK and the USA, nor the ability to utilise a flexible ‘soft-touch’ provisional liquidation regime as has been done in the Cayman Islands and Bermuda.