Hong Kong Court recognises foreign insolvency proceedings despite no COMI

In a previous blog post, we considered Re Global Brands Group Holdings Ltd [2022] HKCFI 1789 which reflects an alignment with the global trend to recognise foreign insolvency proceedings commenced in the company's centre of main interest ("COMI"), departing from the orthodox common law position of recognising foreign insolvency proceedings commenced in the company's place of incorporation.  A recent case, Re Bull's-Eye Limited [2024] HKCFI 3000, follows the COMI approach of Re Global Brands and examines the extent to which the exceptions under that approach apply.

To recap, Re Global Brands held that the Hong Kong Courts will recognise foreign insolvency proceedings if those proceedings are commenced in the jurisdiction in which the company's COMI is located.  If it is not, recognition and assistance ought to be declined unless one of the exceptions apply: (1) if the liquidator is appointed in the place of incorporation, the application is limited to the recognition of the liquidator's authority and orders incidental to that authority (described by Harris J as "managerial assistance"), and (2) if the liquidator is appointed in the place of incorporation but the circumstances do not fall within (1) above, then the recognition and limited assistance should only be given as a matter of practicality. 

The company in the present case is Bull's Eye Limited, a BVI-incorporated company and shareholder of Hua Han Health Industry Holdings Limited, a company previously listed on the Hong Kong Stock Exchange which in turn holds a group of companies consisting of subsidiaries in Hong Kong, the PRC and the BVI.  The company was ordered by the BVI Court to be wound up and insolvency proceedings therefore commenced in the BVI, i.e. the company's place of incorporation, not COMI which would more likely be Hong Kong.  Notwithstanding this, the Hong Kong Court held that the "managerial assistance" exception applied and there is "no doubt" the requirements for recognition and assistance are satisfied.  This is because the company maintains accounts with multiple banks and securities firms in Hong Kong, and the recognition of the joint liquidators' status is therefore necessary to enable them to take possession of and realise those assets for distribution.

This decision demonstrates the Hong Kong Courts' continued willingness to recognise foreign insolvency proceedings and to empower foreign liquidators to carry out their duties in respect of assets that may be located in Hong Kong.

For more information, please contact Jojo Fan, Managing Partner, Rachael Shek, Partner, Sara Troughton, Professional Support Lawyer or your usual Herbert Smith Freehills contact.