Hong Kong, China : The Asia-Pacific Restructuring and Insolvency Guide 2006

The insolvency law in Hong Kong, China is contained in the Companies
Ordinance, the Bankruptcy Ordinance and the Companies (Winding-up)
Rules. It is based on the law of the United Kingdom, prior to the introduction
of the Cork Report. Like the regimes in Australia and New Zealand – also
UK-based jurisdictions – it is generally creditor friendly.
Out-of-court restructuring, schemes of arrangement, compulsory
liquidations, creditors’ voluntary liquidations and receiverships are available
under the insolvency law. No corporate rescue procedure is currently
available.
In 1996 the Law Reform Commission published a report advocating a
corporate rescue procedure known as provisional supervision. A bill was
gazetted in May 2001 with a view to enacting the legislation, but progress has
been slow and the proposed bill has not yet been passed. With no statutory
rescue mechanism in Hong Kong, China, creditors of a company in financial
difficulty must pursue an informal restructuring process or enter into a
scheme of arrangement.
Recently, the courts have proved themselves willing to appoint provisional
liquidators to explore and implement restructuring and corporate rescue
arrangements. If a rescue is not ultimately possible, winding-up follows and
the provisional liquidators revert to their traditional role of preserving the
assets of the company prior to the winding-up order being made.

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