In a precedent-setting decision delivered on 8 February 2018, the Hong Kong Court of First Instance has granted a recognition order in favour of foreign liquidators appointed in an insolvent liquidation commenced by a shareholders' resolution. In so recognising the foreign liquidators, the Court confirmed that its exercise of the common law power of assistance (see our Legal Update "Hong Kong Recognises Foreign Liquidators" (2014)) extends to foreign insolvent voluntary windings-up, an issue that has been in doubt following the views expressed by Lord Sumption in the widely cited Singularis decision   AC 1675 at . In reaching this decision, his Lordship made the observation that "…what matters for cross-border insolvency assistance is not whether the foreign insolvency officeholder is or is not an officer of the foreign court. What matters is whether the foreign proceeding is collective in nature, in the sense that it is 'a process of collective enforcement of debts for the benefit of the general body of creditors' Re Lines Bros Ltd  Ch 1, 20. It is with collective insolvency proceedings that the principle of modified universalism is concerned  Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings  1 AC 508". Applying this litmus test, his Lordship would not provide recognition to liquidators appointed in a foreign solvent liquidation on the basis that it is not a collective insolvency proceeding but rather "…more akin to the 'private arrangement' the Privy Council was referring to [in Singularis]   AC 1675 at ". This approach is consistent with the principle of modified universalism, the rationale underlying the common law power of assistance and the means by which, absent being a party to the UNCITRAL Model Law on cross-border insolvency, the Hong Kong Companies Court is able to recognise and grant assistance to foreign insolvency proceedings.
Mayer Brown JSM acted for the liquidators on their application.