61 Asian Legal Business | November 2024 between Mainland insolvency law and Hong Kong insolvency law, in terms of the Mainland administrators’ powers and duties (Article 25), a Mainland liquidation stay (Article 19) and the requirement of pari passu distribution of debtors’ assets (Article 113). The learned Judge examined some decisions of Mainland Courts and the operation of Article 5 of the EBL, which envisages that there would be recognition of foreign liquidators in Mainland Courts as one would expect to be the case given the transnational business conducted by many Mainland businesses. Prudently, however, the learned Judge acknowledged that the extent to which greater assistance should be provided to Mainland administrators in the future would have to be decided on a case by case basis and the development of recognition would be likely to be influenced by the extent to which the court is satisfied that the Mainland, like Hong Kong, promotes a unitary approach to transnational insolvencies. The Cooperation Mechanism On 14 May 2021, the Supreme People’s Court (“SPC”) and the Government of Hong Kong reached a consensus in relation to mutual recognition of and assistance to insolvency proceedings between the courts of the Mainland and of Hong Kong (“Cooperation Mechanism”). In a nutshell, under the Cooperation Mechanism, three Mainland cities were designed by the Supreme People’s Court as pilot areas, namely Shanghai, Xiamen and Shenzhen (the “Pilot Areas”), where: 1. The Intermediate People’s Court in the Pilot Areas may initiate cooperation with the Hong Kong Court on mutual recognition of and assistance to bankruptcy proceedings. 2. A liquidator or provisional liquidator in insolvency proceedings in Hong Kong may apply to the relevant Intermediate People’s Court at the Pilot Areas for recognition of compulsory winding up, creditors’ voluntary winding up and corporate debt restructuring proceedings brought by a liquidator or provisional liquidator as sanctioned by the Hong Kong Court in accordance with Hong Kong law, recognition of his office as a liquidator or a provisional liquidator, and grant of assistance for discharge of his duties as a liquidator or a provisional liquidator. 3. An administrator in Mainland bankruptcy proceedings may apply to the High Court of Hong Kong for recognition of bankruptcy liquidation, reorganisation and compromise proceedings under the EBL, recognition of his office as an administrator, and grant of assistance for discharge of his duties as an administrator. Key documents outlining the framework of the Cooperation Mechanism are as follows: 1. The Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region signed by the Secretary for Justice and the SPC on 14 May 2021 (the “Record of Meeting”); 2. Procedures for a Mainland Administrator’s Application to the Hong Kong SAR Court for Recognition and Assistance - Practical Guide, issued by the Department of Justice; and 3. The Supreme People’s Court’s Opinion on Taking Forward a Pilot Measure in relation to the Recognition of and Assistance to Insolvency Proceedings in the Hong Kong Special Administrative Region. Interplay between the Cooperation Mechanism and Common Law Naturally, the Cooperation Mechanism has grown to become the prevailing avenue for recognition and assistance sought between the Pilot Areas and Hong Kong. However, for regions outside the Pilot Areas, the Hong Kong Court was asked to apply common law in dealing with recognition of PRC-included foreign insolvency proceedings and assistance, with reference to prevailing legal authorities including Re CEFC. After all, the Cooperation Mechanism does not confer jurisdiction on the court; The jurisdiction remains rooted in common law. In Re Guangdong Overseas Construction Corporation [2024] HKCFI 1340 which concerns an administration appointed by the Guangzhou Intermediate People’s Court of Guangdong Province, i.e. outside of the Pilot Areas, The Honourable Madam Justice Linda Chan summarized the common law approach with reference to Re CEFC as follows:- 1. The power at common law to recognize and assist foreign office-holder does not depend on winding up proceedings having been commenced against the company in the assisting court, as the court is asked to recognize the office-holder appointed in the place of incorporation as the lawful agent in accordance with principle of private international law. 2. The applicant has to satisfy the court that: (a) The foreign insolvency proceedings are collective insolvency proceedings which include proceedings opened in a civil law jurisdiction ( Re CEFC §§8-9); (b) The foreign insolvency proceedings are conducted in The Greater Bay Area
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