60 Asian Legal Business | November 2024 Recognition and Assistance of Mainland Liquidation in the Hong Kong Court: Re CEFC and a 5-year Review In December 2019, administrators of a company in Mainland China (“Administrators”) obtained an unprecedented order in Hong Kong for recognition of their appointment and judicial assistance at common law: Re CEFC Shanghai International Group Ltd (in liquidation) [2020] 1 HKLRD 676 (13 January 2020). Soon thereafter, Re CEFC was applied in a similar application in Re The Liquidator of Shenzhen Everich Supply Chain Co, Ltd [2020] HKCFI 965 on 26 May 2020. In both cases, Sit, Fung, Kwong & Shum acted for the PRC administrators, who had the function played by liquidators in the Hong Kong system. Now, five years later, this article reviews how Re CEFC has evolved into a landmark legal development in cross-border liquidations. Re CEFC CEFC Shanghai International Group Limited (上海华信国际集 团有限公司) (“CEFC”) went into insolvent liquidation with joint and several administrators appointed, pursuant to the rulings by the Shanghai No. 3 Intermediate People’s Court (上海市第 三中级人民法院) under the PRC Enterprise Bankruptcy Law (《中华人民共和国企业破产法》, “EBL”) of the People’s Republic of China (the “Mainland Liquidation”). For safeguarding CEFC’s assets in Hong Kong, including a HK$7.2 billion receivable claim that CEFC has against its Hong Kong subsidiary which had been subject to pending creditor’s enforcement in Hong Kong following a €29 million default judgment, the Administrators made an urgent application to the High Court of Hong Kong, for a recognition order seeking recognition of the Mainland Liquidation and assistance to the Administrators in Hong Kong, including among others, a stay of proceedings against CEFC and its assets in Hong Kong. Prior to Re CEFC, the Hong Kong court only routinely recognised and assisted officeholders appointed in insolvency proceedings in some other common law and civil law jurisdictions, including the Cayman Islands, the BVIs, Japan, etc.. Re CEFC was therefore the first application, as the learned Judge observed, for recognition and judicial assistance by administrators appointed by the PRC court at common law, and certainly the first case in Hong Kong. As the learned Judge remarked, “this is an application of considerable importance”, given the size of the Mainland economy and the financial problems increasingly experienced by Mainland businesses, which increasingly have assets located overseas. The Decision in Re CEFC In granting the Administrators’ application, The Honourable Mr. Justice Harris took the opportunity to review in some detail the past decisions in distilling the legal principles governing recognition and assistance applications by liquidators from various jurisdictions. The learned Judge observed that the Mainland Liquidation was undoubtedly a collective insolvency proceeding, and thus recognizing the Mainland Liquidation was consistent with the Hong Kong Court’s existing practice. As the learned Judge also observed, the powers sought by the Administrators were consistent with Mainland insolvency law. He noted in particular that the EBL showed the correspondence 香港法院对内地公司清盘的认可与协助： 上海华信案之五年回顾 The Greater Bay Area
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