Hong Kong Corporate Rescue Proposals: Making Secured Creditors More Secure

Abstract:     
A glaring weakness in Hong Kong insolvency law has been the lack of an acceptable corporate rescue procedure. Under existing law it is difficult to reorganize or restructure a company in financial difficulty. Therefore, creditors holding fixed and/or floating charges often resort to receivership and, ultimately, unsecured creditors have little option but to petition for the liquidation of the company. From the perspectives of many of the participants, the result is often wasteful and unsatisfactory. It appears help is finally on the way. Over the past year, important developments have addressed the difficulties in rehabilitating companies in Hong Kong. Most significantly, in October 1996 the Law Reform Commission of Hong Kong published its Report on Corporate Rescue and Insolvent Trading, which proposes dramatic changes to facilitate the rescue of financially troubled companies in Hong Kong. It is anticipated that a bill will be gazetted in 1998. This article discusses the proposed changes to Hong Kong law in the Report on Corporate Rescue.

Number of Pages in PDF File: 16

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