The closest Chinese equivalent to the English idiom of ‘sticking one’s head in the sand’ is ‘covering one’s ears to steal bells’.

Both idioms express the received wisdom that it is unproductive to ignore objective reality.

In other words, it is better to face difficult facts and to engage with them, as soon as possible.

This is certainly true in the case of financially distressed or insolvent companies doing business in the PRC, incorporated in offshore jurisdictions such as Bermuda or the Cayman Islands, and whose shares are listed on the Hong Kong Stock Exchange.

Take Action Sooner Rather than Later

In light of COVID-19, the Courts of Hong Kong, Bermuda, and the Cayman Islands have been keen to get the message out to indebted Hong Kong and PRC based corporate groups that it is best to engage, as soon as possible, with legal, financial, and restructuring advisors (and with offshore creditors) to reduce the risk of a compulsory liquidation of an offshore holding company, and to increase the prospect of an effective and successful restructuring.

In other words, don’t just ignore payment deadlines; offshore creditors’ claims; statutory demands; or winding up petitions.

Take advice!

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