A New Chapter In Cross-Border Insolvency: The First Application By Hong Kong Liquidators For Recognition And Assistance In Mainland China.

Legal News & Analysis - Asia Pacific - Hong Kong - Insolvency & Restructuring

25 August 2021

On 14 May 2021, a cooperation mechanism was established between the Mainland and Hong Kong in the form of the Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region and Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Court of the Mainland and the Hong Kong Special Administrative Region and the Supreme People’s Court’s Opinion on taking forward a pilot measure in relation to Recognition and Assistance to Bankruptcy (Insolvency) Proceedings in the Hong Kong Special Administrative Region (the “SPC Opinion”).  

Pursuant to such cooperation mechanism, the Mainland and Hong Kong jurisdictions agreed to terms where pilot cities (Shanghai, Shenzhen and Xiamen) in the Mainland and Hong Kong would mutually recognise and assist each other in insolvency matters.  It is an important milestone for practitioners on both sides of the border, and marks the beginning of increased judicial cooperation which would definitely be helpful as cross-border economic activities inevitably increase between Hong Kong and the GBA.   

The very first application was recently issued by the Hong Kong Companies Court to the Bankruptcy Court of the Shenzhen Intermediate People’s Court in Re Samson Paper Company Limited (in Creditors’ Voluntary Liquidation) [2021] HKCFI 2151.  A liquidator appointed by a Court outside the Mainland has never been formally recognised by a Mainland Court, and so, as the Honourable Mr. Justice Harris remarked, Re Samson Paper is a significant decision in terms of Mainland-Hong Kong cooperation in the sphere of corporate insolvency, and it serves as a helpful summary of the procedure and principles at play. 

The company in Re Samson Paper, Samson Paper Company Limited, was incorporated in Hong Kong, with susbtantial assets in the Mainland, including subsidiaries incorporated in Shanghai and Shenzhen, landed property in Beijing, and receivables due from affiliated Mainland-based companies.  Liquidators were appointed in Bermuda in July 2020 on a soft-touch basis, and their appointment and powers were subsequently recognised in Hong Kong in August 2020.  The Company was put in compulsory liquidation in Hong Kong in August 2020.  The liquidators took out an application to the Hong Kong Companies Court for a letter of request to be issued to the Bankruptcy Court of the Shenzhen Intermediate People’s Court to assist them in securing and collecting the Company’s substantial assets in Shenzhen.  

The Procedure 

According to Article 6 of the SPC Opinion, a Hong Kong liquidator shall submit the following documents (with a Chinese translation if the original document is not in Chinese):-

  1. An application; 

  2. a letter of request for recognition and assistance issued by the Hong Kong High Court;

  3. the relevant documents on the commencement of the Hong Kong Insolvency Proceedings and in relation to the appointment of the Hong Kong Administrator;

  4. materials showing that the debtor’s centre of main interests is in the Hong Kong Special Administrative Region, and if any of such materials was issued outside the Mainland, it shall be certified in accordance with the law of the Mainland;

  5. a copy of the judgment in respect of which the application for recognition and assistance is made;

  6. a copy of the identity document of the Hong Kong Administrator, and if such identity document was issued outside the Mainland, it shall be certified in accordance with the law of the Mainland; and

  7. evidence showing that the debtor’s principal assets in the Mainland are in a pilot area, or that it has a place of business or a representative office in a pilot area.

The Law 

For the cooperation mechanism to be applicable, the company must have its COMI in Hong Kong.  Pursuant to Article 4 of the SPC Opinion and the decision of Re Samson Paper, the cooperation mechanism applies only to cases where the company’s COMI is in Hong Kong continuously for at least 6 months.  The SPC Opinion defines “COMI” generally as “the place of incorporation”, but the process is not inflexible – it would also account for other factors such as the place of principal office, principal place of business, principal place of assets etc.  

Harris J further held that the Hong Kong Court has the inherent jurisdiction to grant letters of request to permit Hong Kong liquidators to seek recognition and assistance in other jurisdictions.  What the Court would consider before granting a letter, is which jurisdiction would be the most appropriate or convenient forum for the determination of the issue in question.  Harris J also found it to be desirable for the Hong Kong liquidators to be recognised and assisted by the Shenzhen Court so that they may be able to carry out their duties in the jurisdiction of the Shenzhen Court.  


The introduction of the cooperation mechanism is the beginning of the removal of an all too common obstacle encountered by insolvency practitioners in Hong Kong, and its timely implementation goes well with the anticipated increase in cross-border economic interaction in the foreseeable future.  It is a welcomed development, and it is anticipated that more applications will follow Re Samson Paper to make use of this very valuable resource.  



For further information, please contact:

Evelyn Chan, Partner. Gall
[email protected]


Adriel Wong, Gall
[email protected]