Chinese cross-border insolvency laws: Recent developments and international implications

The present Chinese insolvency law is under the process of legislative reform, and one focus point among legislators and academics is cross-border issues. China is slowly opening up its market to foreign insolvency proceedings, as demonstrated by the 2021 Chinese Mainland-Hong Kong cross-border insolvency cooperation mechanism. This first attempt, however, is only available in three trial cities in the Mainland and does not apply to jurisdictions other than Hong Kong. Nevertheless, it does not undermine the intention of the Mainland to advance its cross-border insolvency framework. Based on a thorough examination of Chinese legislation and judicial practices, this article submits that China would be willing to accept international standards and be a more active player in international insolvencies.     

Cross-border insolvency law in India: Are the principles of comity of courts and inherent common law jurisdiction relevant?

Deliberations are in the final stages for enacting a cross-border insolvency law in India based on the UNCITRAL Model Law on Cross Border Insolvency 1997 (‘Model Law’). The cross-border insolvency regime in India will provide an avenue for recognising foreign insolvency proceedings in India. Although it is a matter of time before India adopts the Model Law, it is important to examine whether there remains an independent basis in addition to the Model Law for recognising and providing assistance to cross-border insolvency proceedings in India. This is crucial on account of the following reasons: first, the Model Law does not provide that it is the exclusive pathway for foreign creditors to seek remedies under domestic law. The Model Law, as reflected in Article 7, was intended by its drafters to be an additional gateway to those provided under local laws. The proposed Indian law in Article 5 of Draft Part Z of the Insolvency and Bankruptcy Code 2016 also does not depart expressly from this principle. Second, there may be instances where neither the ‘Centre of Main Interests’ nor an establishment of a corporate debtor is situated in India; therefore, assistance and cooperation in respect of such cross-border insolvency proceeding can only be based on the inherent common law jurisdiction, if available. Third, the cross-border insolvency framework in India will be premised on the requirement for reciprocity and, therefore, countries that do not meet the reciprocity requirement may find it beneficial if such an independent basis for recognition exists in India. This article argues that foreign representatives should be encouraged to explore the possibility of seeking assistance from the commercial courts in India under the common law principles governing cross-border insolvency and that the courts in India should be open to this possibility.     

Recent Development in Recognition of and Assistance to Foreign Insolvency Representatives Under the Hong Kong Common Law

Although Hong Kong has neither enacted nor launched any plan to enact a statute addressing cooperation and assistance on cross‐border insolvency matters, recently, a unique Hong Kong approach dealing with recognition and assistance in cross‐border insolvency is gradually forming under common law. Thanks to the efforts made by the Companies Court of the Hong Kong High Court, insolvency representatives appointed in the place of incorporation of the debtors may, firstly, be accorded a certain degree of automatic recognition and cooperation based on traditional private international law rules without going through a recognition procedure and, secondly, be recognized and granted active assistance under principle of universalism at common law. With regard to the limits of this common law power, the court has referred to but not strictly followed the British Privy Council's decision in Singularis Holdings Limited v. PricewaterhouseCoopers (Singularis) and instead followed the previous approach in Cambridge Gas Transport Corp v. Official Committee of Unsecured Creditors (of Navigator Holdings PLC and others) (Cambridge Gas). The Companies Court also attempted to simplify and facilitate the application and grant of this common law recognition and assistance through a series of innovations. Copyright © 2018 INSOL International and John Wiley & Sons, Ltd.     

Chinese cross‐border insolvencies: current issues and future developments*

This article deals with several problems pertaining to cross‐border insolvency, an important but ignored area in China. In this article, the current status of Chinese bankruptcy laws has been firstly addressed, with a focus on its legal blank on cross‐border insolvency and unsatisfactory judicial practice. Thereafter, the influential Guargdong International Trust and Investment company case has been analysed, which further highlights the inadequacy of Chinese bankruptcy legislation and crying needs for its reform. Basing on the essential principles embodied in the United Nations Commission on International Trade Law Model Law and European Union Regulation, the gaps between Chinese bankruptcy laws and international practice have been made clear. Accordingly, the developments of Chinese cross‐border insolvency have been proposed in order to provide helpful references for the future legislation. Copyright © 2001 John Wiley & Sons, Ltd.     

Consumer insolvency in Australia

This paper seeks to identify and assess the features of Australian bankruptcy regulation as they apply to consumer insolvency. Although Australian bankruptcy law makes no explicit recognition of ‘consumer bankruptcy’ as a regulatory target in itself, the Australian legislation nevertheless has a number of features that impact on what would generally be seen to be consumer bankrupts. After providing an outline of the legislative framework within which consumer bankruptcy operates, the paper examines the consumer insolvency aspects of this legislation, together with an assessment of proposed reforms. Some brief comparisons of the ‘consumer’ features of Australian regulation with that of the more fully developed consumer provisions of the Canadian and the United States bankruptcy legislation, are made in order to highlight the Australian position. The Australian Act has historically drawn heavily on English bankruptcy legislation but inevitably Australia has to some extent developed along its own path. Notable is the reasonably vigorous approach to discharge from bankruptcy. The proposed reforms to the Bankruptcy Act, which have followed a detailed consultative process, are largely directed to consumer debtors. Some of these reforms are directed against a perceived debtor abuse of the bankruptcy system. Other reforms, such as increasing the availability of debt agreements, are more generous to insolvent debtors. On the whole the reforms appear to be based more on political than empirical grounds.     

Conflict,collaboration, fuzzy jurisdictions and partial settlements. Accountants,lawyers and insolvency practice during the late 19th century

Inter-professional conflict over insolvency work in Victorian England and Wales is often considered a formative instance of jurisdictional competition between accountants and lawyers. The paper explores this episode in the context of Abbott's theory of The System of Professions. It is shown that the Bankruptcy Act, 1869 disturbed inter-professional relations and unleashed competition between accountants and lawyers for insolvency work. However, the resultant hostility was substantially conducted through the professional media and did not engage unified occupational communities. In everyday practice accountants and lawyers maintained relations of mutual dependency rather than conflict. Some elements of a jurisdictional settlement between accountants and lawyers over bankruptcy work was achieved during the 1870s and 1880s through an intellectual division of labour, judicial decision making and organisational change. However, these forms of settlement seldom proved conclusive and statutory changes effectively perpetuated inter-professional competition for insolvency work into the 20th century.     

Governmental responses mitigating the impact of COVID-19 on small and medium-sized enterprises and the case for insolvency law reforms in Hong Kong

The COVID-19 crisis has triggered unprecedented governmental responses around the world to mitigate the effects of the pandemic, with particular attention being given to small and medium-sized enterprises (SMEs). Governments around the world have implemented economic measures in the form of direct subsidies or government-guaranteed loans, and legislated to provide mandatory relief from contractual obligations. In addition, increasing recognition of the limitations of insolvency regime in addressing the crisis for SMEs prompted many jurisdictions to change their laws. However, consistent with its free market principles, Hong Kong has only adopted economic measures and has provided limited contractual relief in favour of SME tenants. There is no SME-specific insolvency law nor is the Hong Kong government currently considering any such law reform. This article reviews the need for a temporary insolvency regime to cater to distressed but economically viable SMEs restructure their debts. Drawing on a set of interviews with Hong Kong SME owners, this author finds that they are often unaware of how insolvency law operates, their unsecured creditors are apathetic, and bankruptcy stigmatism is high. Based on a review of the frameworks in the other advanced common law jurisdictions such as the United States, Australia and Singapore, a recommendation for a simplified restructuring and liquidation framework is developed. The process is designed to be simplified and expedited and it incentivises early negotiations with creditors.     

Maritime cross‐border insolvency in China

Due to the high degree of mobility of ships and the special operational structures of shipping companies, it is difficult to harmonise the cross‐border insolvency regime with the maritime law regime governing ships. One of the typical examples is the recent bankruptcy of Hanjin Shipping Co Ltd. Chinese creditors were heavily affected by the bankruptcy of Hanjin. However, Hanjin never filed an application to have its Korean insolvency proceeding recognised in the People's Republic of China (PRC). Nor did it commence any ancillary insolvency application under the Enterprise Bankruptcy Law of the PRC. Taking Hanjin's bankruptcy as an example, this article examines the current statutory regime of cross‐border insolvency in the PRC in detail and analyses the approach adopted by the Chinese courts to resolve the conflicts that arise between the cross‐border insolvency and maritime law regimes.     

The legal responses of Canada and Poland to international bankruptcy and insolvency with a focus on cross‐border insolvency law

This article discusses and compares the respective legal responses of Canada and Poland to international bankruptcy and insolvency with a focus on cross‐border insolvency law. Specifically, the issues addressed herein concern jurisdiction, recognition of foreign bankruptcy proceedings, and co‐operation with foreign courts and foreign administrators. Notwithstanding some real differences between Canadian and Polish international insolvency proceedings, both legal regimes may be compared, since both countries have adopted many of the principles contained in the UNICTRAL Model Law on Cross‐Border Insolvency. The major impetus behind the changes established by Canada in its bankruptcy and insolvency laws have been the economic realities produced by the North American Free Trade Agreement. Likewise, Poland's accession to the European Union (EU) has been a major catalyst for revising the Polish Insolvency and Restructuring Act. Part II of the said act is entirely devoted to international insolvencies. However, following Poland's adherence to the EU, those sections of the Polish Insolvency and Restructuring Act that deal with international or cross‐border insolvencies will be severely limited or constrained in scope. The article indicates that Poland, the EU and Canada are taking the necessary steps to meet the needs of debtors who would like to restructure in an international setting. Copyright © 2006 John Wiley & Sons, Ltd.     

跨境贸易人民币结算试点与港澳人民币业务发展

随着香港、澳门与内地间的经贸往来和人员流动日趋紧密,在有关政策推动下,香港和澳门的人民币业务不断拓展.但由于人民币在港澳与内地之间的单向交易性等原因,近几年港澳地区的人民币业务发展速度不断放缓.跨境贸易人民币结算试点是中国经济金融改革开放的重大战略决策,它将有利于推进人民币国际化进程,香港和澳门将一如既往在其中发挥重要的窗口作用;同时它也将进一步促进香港、澳门经济金融的发展,尤其是进一步加快港澳人民币业务的发展.     

中注协与香港会计师公会签署审计准则持续等效联合声明

2011年9月5日,中国注册会计师协会与香港会计师公会在香港签署审计准则持续等效联合声明,确认新修订的内地审计准则与香港审计准则实现持续等效。财政部副部长、中国注册会计师协会会长李勇和香港会计师公会会长蔡永忠出席签字仪式并发表讲话。中国注册会计师协会副会长兼秘书长陈毓圭与香港会计师公会行政总裁张智媛作为双方代表     

‘Bankruptcy tourism’ under the EC regulation on insolvency proceedings: A view from England and Wales

This article provides an account of the emergent phenomenon of ‘bankruptcy tourism’—forum shopping by debtors for favourable personal insolvency law—within the EU and with particular reference to England and Wales. After outlining the structural features of the European legal framework that make forum shopping for personal insolvency law possible, including the EC Regulation on Insolvency Proceedings and explaining why England and Wales in particular has proved to be an attractive ‘tourist’ destination, the article charts how the official receivers and the courts in England and Wales have sought to manage the influx of foreign bankruptcies in terms of legal principle and process drawing on two reported cases, Eichler and Mitterfellner. It will be seen that the institutional response in England and Wales has been twofold. First, the ‘problem’ of forum shopping debtors has been framed as a problem of policing the line between genuine and fictional relocations. Secondly, there are signs that the procedural onus on debtors to evidence their claim to English jurisdiction before a bankruptcy order is made has been increased, a move that can be interpreted as a form of institutional resistance designed to raise the barrier to entry. Having sought to illuminate the problems, costs and inconvenience associated with forum shopping from a practitioner standpoint, we explore the ‘good’ versus ‘bad’ forum shopping question and consider the scope for reform of the EC Regulation. Adopting a creditor perspective, we conclude provisionally that the Regulation could usefully be reformed to limit the scope for insolvent debtors to switch their COMI in anticipation of filing for bankruptcy. Copyright © 2010 John Wiley & Sons, Ltd.     

Ethics and conflicts,the role of insolvency professionals in the integrity of the Canadian bankruptcy and insolvency system

Insolvency practice involves a balance between adherence to rules of ethical conduct and the avoidance of conflicts of interest, and the need to find cost effective methods of debt collection or restructuring under the statutory regime. Potential conflicts of interest are inherent in the multiple roles granted to such professionals under the insolvency system, whether the financial distress is personal or commercial. This article begins to explore whether or not these conflicts serve as barriers to the effective administration of the insolvency and bankruptcy system. It also examines whether oversight of professional ethics and avoidance of conflicts is a matter for legislative intervention or best left to the profession, including temporal and materiality issues in disclosure of potential conflicts, and accountability to stateholders through the appointment process. The key issue is how one manages those conflicts while maintaining the integrity of the system. Copyright © 2004 John Wiley & Sons, Ltd.     

When Hong Kong becomes SAR,is the mainland ready? Problems of judgments recognition in cross‐border insolvency matters

After Hong Kong's handover in the year 1997 to the People's Republic of China (PRC), two judicial systems began to operate in parallel in one country. To date, judicial convergence in cross‐border insolvency matters has not yet been established between the mainland and the Hong Kong Special Administrative Region (HKSAR). By reviewing several recent court decisions, this article demonstrates some problems of judgment recognition in matters of cross‐border insolvency between the two regions. Copyright © 2010 John Wiley & Sons, Ltd.     

Challenges for a mature insolvency system in a transitional economy: Lessons from Croatia

Being a post‐communist, central‐eastern economy, Croatia and its insolvency system resembles many transitional countries in the region. In order to achieve a better perspective of the current situation, problems, and their possible solutions, a broad research of the Croatian insolvency system was carried out. Questionnaires were sent out to bankruptcy practitioners, interviews with some of the most experienced experts in the field were performed, and extensive databases have been obtained. The findings show a high level of tolerance of government institutions towards insolvency, making insolvency procedure in practice non‐compulsory even though the Corporations law (Article 626) proclaims non‐filing as punishable, with the penalties rising up to 2 years of imprisonment. As the data present, filing for bankruptcy does not necessarily have to be expected even in the case of long‐term (over 1 year) insolvency. This tolerance was present long before the recession and the global crisis of the late 2000s began. Copyright © 2010 John Wiley & Sons, Ltd.     

Does the common law power to grant cross‐border insolvency assistance apply to an insolvency winding‐up that is voluntary? The reaction to Singularis from Singapore and Hong Kong

In many common law jurisdictions, the common law power of courts to grant assistance in respect of foreign insolvency proceedings exists independently of statute. The nature of the power, however, continues to generate debate. Obiter dicta of the Privy Council suggests that no assistance is available where the foreign proceeding is a voluntary winding‐up. This article evaluates the position by reference to Singapore and Hong Kong decisions and concludes that a refusal to grant assistance in circumstances involving an insolvent voluntary winding‐up is inconsistent with the principle of modified universalism and that a broader recognition test should be adopted.     

粤港澳大湾区跨境征信合作思考

粤港澳大湾区跨境征信合作满足了服务实体经济发展、防范化解金融风险、深化金融改革的需要.在分析大湾区跨境征信合作可行性的基础上,提出粤港澳大湾区跨境征信合作面临征信数据跨境流动立法较滞后、征信业发展模式存在差异、征信产品互认较难、征信利益诉求不对等的障碍.参考欧美征信数据跨境流动主要做法提出建议:完善法律法规,建立沟通协...     

Jurisdiction concerning annex actions in the context of the insolvency and Brussels Ibis regulations

The legislation of the European Union has addressed the private international law aspects of civil and commercial matters and those of insolvency cases separately. While the Brussels Ibis Regulation (and its predecessors) focuses on “classic” civil of commercial cases, insolvency proceedings are subject to the (recast) Insolvency Regulation. However, the close interference between the two related areas of law—commercial and insolvency—results in a category of cases that are commercial and contentious in nature, and so they would tend to gravitate towards the Brussels regime, but yet they are so closely connected to the insolvency proceedings that justifies a special approach. This article focuses on the question of international jurisdiction regarding these “annex actions” in the context of the EU law. It will attempt to explore the historical roots of the current provisions and the evolution of both the European legislation and the relevant case law. The examination of this progression provides a better understanding of the current legislation and answers some questions apparently left open in the recast Insolvency Regulation.     

Aspects of tax pertaining to insolvency law in South Africa

This paper seeks to briefly analyse the somewhat convoluted provisions contained in South African tax legislation that apply to insolvent entities in South Africa. While South Africa has modern and effective taxation laws, the provisions, when applied to insolvent entities, are often exposed as cumbersome and ineffective. Tax legislation in South Africa does not take proper cognisance of the unique nature of insolvency, often placing a heavy burden on the trustee or liquidator who is required to administer the estate as speedily and effectively as possible. In addition, there are different rules that apply to consumer and corporate insolvency regarding the assessment of income tax pre‐ and post‐liquidation. The recent introduction of a capital gains tax has placed an additional burden on insolvency practitioners, especially considering the lack of clarity as to how these provisions should be applied in practice. Although the Value‐Added Tax Act was introduced more than a decade ago, its provisions continue to pose problems for insolvency practitioners during the administration process of insolvent estates. Despite these difficulties, the South African revenue authorities are to be lauded for the sensible manner in which problems are addressed in practice. Copyright © 2005 John Wiley & Sons, Ltd.     

The moral regulation of markets: Professions, privatization and the english insolvency act 1986

Both economists and sociologists in the last two decades have pointed to the variety of ways that markets require normative foundations and legitimation. In order to understand better how market morality is constructed through law, this paper examines how Mrs Thatcher's Conservative Government used the 1986 Insolvency Act to produce a reconstruction of market behavior. First, it championed privatization in the administration of bankruptcy and in corporate liquidation and reorganization. To do so required a clean-up of the “unacceptable face of capitalism.” It used the insolvency reforms to develop a moral code that distinguished among three types of commercial behavior — mistakes, recklessness, and criminal activity. Second, the Act attempted to “professionalize” some elements of business practice. It did so by developing codes that exposed reckless and criminal company directors to civil actions with strong punitive sanctions, including personal liability and disqualification from management. And third, the legislation created a new occupational monopoly of insolvency practitioners, which was charged with the monitoring of directors' behavior, and reporting recklesssness and the appearance of criminality to government enforcement agencies. The paper concludes that Mrs Thatcher's Government used the ideals and actuality of professionalization as an instrument to define and improve both market morality and efficiency. This linkage between professionalization and market rejuvenation further demonstrates how states may use professions as agents of economic surveillance and enforcers of commercial morality. It raises questions about the conditions under which states will exert their enormous leverage over licensing to compel professions to act as moral agents on the state's behalf.