Hong Kong is one of the leading capital markets in the world. Billions of dollars are raised on a day to day basis, from all parts of the world, through a wide range of capital and financing activities, particularly Initial Public Offerings (‘IPOs’). The Cayman Islands is a popular jurisdiction for setting up listing vehicles in Hong Kong IPOs as it offers corporate flexibility, a well-established English law based legal system and tax neutrality. Of all the listed companies in Hong Kong, slightly more than half of them are incorporated in the Cayman Islands.
It is imperative that an effective cross-border insolvency and restructuring regime is in place to accommodate potential complex insolvency and restructuring scenarios involving these valuable public companies. However, one significant hurdle is that Hong Kong has been slow in introducing comprehensive legislation for the purposes of corporate rescue and restructuring. It is hoped that such legislation will be on its way. For now, the burden falls on the judiciary and the legal practitioners to develop innovative and practical solutions within the existing legal framework.
This article discusses some recent cases in Hong Kong which demonstrates how the Hong Kong Companies Court has successfully formulated innovative and practical judicial solutions to complex cross-border insolvency and restructuring issues.