On May 11, 2021, the Supreme People’s Court issued the Opinion on Developing the Pilot for Recognition of and Assistance in Bankruptcy Proceedings in the Hong Kong Special Administrative Region (the “Pilot Opinion”). The Pilot Opinion designated the people’s courts in Shanghai, Xiamen of Fujian Province, and Shenzhen of Guangdong Province to carry out the work for the pilot recognition of and assistance in bankruptcy proceedings in Hong Kong.
The Pilot Opinion sets out the scope of recognition and assistance. Article 2 of the Pilot Opinion defines Hong Kong bankruptcy proceedings as the collective proceedings under the Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Companies Ordinance of the Hong Kong Special Administrative Region, meaning bankruptcy proceedings for companies instead of individuals that are of a “collective proceeding” nature.
The Pilot Opinion stipulates who may apply and which courts will accept the applications. Article 5 provides that Hong Kong administrators may apply for recognition of and assistance in Hong Kong bankruptcy proceedings; such cross-border bankruptcy assistance will fall under the jurisdiction of the intermediate people’s court in the pilot region. Where an application is filed with two or more people’s courts with jurisdiction, the people’s court that sets up the case first shall assume jurisdiction.
For the materials to be submitted with the application to recognize and assist in Hong Kong bankruptcy proceedings, the Pilot Opinions provide that the Hong Kong administrator shall submit the application, a letter from the High Court of the Hong Kong Special Administrative Region requesting recognition and assistance, documents relating to the commencement of the bankruptcy proceedings in Hong Kong and the appointment of a Hong Kong administrator; supporting materials evidencing that the debtor’s primary interests are centered in the Hong Kong Special Administrative Region, which shall be certified in accordance with mainland laws if they are formed outside the Chinese mainland; a copy of the recognition and assistance ruling for which an application was made; a photocopy of the Hong Kong administrator’s identification papers, which shall be certified in accordance with mainland laws if they are formed outside the Chinese mainland; and relevant evidence supporting that the debtor’s main assets are located in a pilot region or that the debtor has a place of business or a representative office in the pilot region.
In addition, the Pilot Opinion also clarifies the objects of recognition, the modification and termination of recognition and assistance, as well as the distribution and liquidation of the bankruptcy estate. It is believed that the rules for the initial exploration of the cross-border bankruptcy assistance will help fully establish the cross-border bankruptcy assistance mechanism in order to promote China’s development of laws involving foreign elements.