Insolvency & Restructuring

Overview

Businesses may face financial difficulties as a result of the business cycle or as a result of structural issues. These difficulties often create conflicts between stakeholders which must often be resolved by reference to legal rights and obligations.

We have a broad range of experience in these situations, from advising shareholders and creditors on their rights on a debtor’s insolvency to advising businesses and their senior executives in or approaching the insolvency zone. We have represented clients in respect of voluntary debt restructurings as well as compulsory debt restructurings through schemes of arrangement. We have advised directors on their duties as they approach the insolvency zone as well as once the winding-up process has begun. We have advised on the enforcement of debt covenants and on the enforcement of security interests. We have represented clients in advancing or defending petitions to wind-up companies and on the rights and powers of liquidators and provisional liquidators.

We have substantial experience in the application of insolvency laws to clearing and settlement systems in the event of the insolvency of participants in the system.

Experience

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  • Representing one of the world's largest derivatives exchange and clearing house operators with a market capitalization of over USD65 billion in connection with statutory insolvency protection in connection with the trading and clearing of OTC derivatives

  • Representing a private company valued at USD2 billion in connection with a contractual dispute with a counterparty with PRC operations, the provisional liquidation of that counterparty and the enforcement of judgment

  • Representing one of the world's largest derivatives exchange and clearing house operators with a market capitalization of over USD65 billion in connection with statutory insolvency protection in connection with the trading and clearing of OTC derivatives

  • Representing a private company valued at USD2 billion in connection with a contractual dispute with a counterparty with PRC operations, the provisional liquidation of that counterparty and the enforcement of judgment

Insights

  • Directors Of Insolvent Companies: Managing the Risk of a Disqualification Order

    Directors of Hong Kong companies operate in an environment of personal liability – a liability that is brought into sharp focus where companies face financial difficulties. This liability may take not only the form of criminal or civil liability but also the form of a disqualification order, meaning an order to bar that director from being involved in the management of a company in the future. In this article, we explore the basis for a disqualification order and provide guidance for individual directors as to how they should conduct themselves in times of financial stress to avoid liability.

  • Personal Liability of Directors: Covid-19 and Trading in the Insolvency Zone

    The coronavirus (Covid-19) pandemic continues to amplify the damage to a Hong Kong economy already battered by political unrest and an evolving reset in the relationship between the U.S. and China. As Hong Kong companies come under increasing cashflow pressure, directors should be aware that if their companies approach insolvency, their duties are increasingly owed to the creditors of their companies rather than to the shareholders of their companies. Pressure from suppliers and other creditors to make payments can place directors in a difficult position of incurring personal liability. In this article, we explore some of the features of this liability..

  • Debt Collection Post-Covid-19: Force Majeure, Frustration and Winding-Up in Hong Kong

    Businesses who wish to take aggressive action to enforce contractual obligations may consider a statutory demand as a means to pressure a counterparty into performance. A statutory demand may result in the winding-up of the counterparty, resulting in the liquidation and dissolution of that counterparty. However, the counterparty may resist the winding-up, disputing that the obligation is in fact owed. The present coronavirus pandemic may provide a basis for the counterparty to argue that it should be excused from performing its obligations through the doctrine of frustration and force majeure. In this article, we explore the nature of a winding-up, how it may be used for debt collection and whether the present pandemic may provide a basis for resisting a winding-up.