Liquidation – foreign company – Hong Kong court empowered at common law to recognise and assist foreign liquidators
P sought to wind up C, a Cayman Islands company listed on the Hong Kong Stock Exchange, on the grounds of insolvency. P also applied for an early hearing of its application to appoint provisional liquidators in Hong Kong (the “Application”). At the hearing on 2 October 2015, it emerged that C had sought its own winding-up in the Cayman Islands and an application to appoint provisional liquidators would be heard on 8 October 2015. The Judge held that P had not shown any reason to pre-empt the Cayman Court’s decision; and while P might have genuine concerns about the risk of documents being destroyed or removed, such fears did not necessitate the Application. The Judge therefore adjourned it pending the Cayman Court’s determination. On 8 October 2015, C’s application was unopposed and the Cayman Court appointed KPMG in both the Cayman Islands and Hong Kong as provisional liquidators (“Ls”).
Held, dismissing the Application, that:
- In respect of applications to wind up both solvent and insolvent foreign incorporated companies, there was a strong presumption that the appropriate jurisdiction to petition for a winding-up order was in the company’s place of incorporation. However, under s. 327 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32), the court had the discretion to wind up a foreign company in the circumstances specified in sub-s. 3.
- At common law, a Hong Kong court had the power to recognise and assist foreign liquidators of insolvent companies wound up in their places of incorporation with similar insolvency regimes by giving them substantially similar powers to those which domestic liquidators would have, for example, to investigate the companies’ affairs by examination and production of documents.
- If the foreign liquidators considered it necessary to seek recognition and assistance from the Hong Kong court, they could obtain a letter of request from the local court and then apply ex parte on paper for a recognition order. If the liquidators thought it desirable to wind up the foreign company in Hong Kong and that they could satisfy the criteria for assessing such petitions, they could apply for a winding-up order, and if required, apply to be appointed as provisional liquidators in Hong Kong pending the determination of the petition.