It is well-settled law in Hong Kong that foreign insolvency proceedings are recognised in Hong Kong provided certain criteria are met. Accordingly, the Hong Kong court is empowered to grant the foreign trustee in bankruptcy or liquidator the powers to administer the company\u2019s affairs in Hong Kong ordinarily vested in such an officeholder under that foreign insolvency regime. The recent Court of First Instance case in Re Kaoru Takamatsu [2019] HKCFI 802, [2019] HKEC 906 was the first case in Hong Kong\u2019s history of a Japanese trustee in bankruptcy applying to the Hong Kong court to seek recognition of the Japanese insolvency proceedings and assistance. In line with the Hong Kong court\u2019s practical approach towards many cross-border insolvency issues, Mr. Justice Harris granted the applicant the rights and powers of a Japanese trustee in bankruptcy ordinarily vested in them in Japan vis-\u00e0-vis the company\u2019s assets and affairs in Hong Kong.<\/p>\n\n\n\n
Background <\/strong> Legal Principles<\/strong>
The Japanese company Japan Life Co, Ltd (the \u201cCompany<\/strong>\u201d) was ordered to be wound up on 1 March 2018 by the District Court of Tokyo, Twentieth Civil Division (the \u201cTokyo Court<\/strong>\u201d) and Mr Takamatsu Kaoru was appointed Trustee in bankruptcy by the same court on the same day. Mr Takamatsu, being the applicant (the \u201cApplicant<\/strong>\u201d), applied to the Hong Kong Court of First Instance to seek recognition of the Japanese insolvency proceedings and the relevant powers to obtain access to the Company\u2019s bank account records held by two banks in Hong Kong. The application was made by way of written application through the applicant\u2019s Hong Kong solicitors, supported by a letter of request from the Tokyo Court and an affirmation of a Japanese lawyer explaining the Japanese Bankruptcy Code. <\/p>\n\n\n\n
In the Judgement, the judge made it clear that the Hong Kong court will recognise the foreign insolvency proceedings if the foreign insolvency proceedings are (i) collective insolvency proceedings; and (ii) the foreign insolvency proceedings are opened in the country of incorporation of the company in question. The judge has defined collective insolvency proceedings as \u201ca process of collective enforcement of debts for the benefit of the general body of creditors\u201d in his judgement for another recent court case.
If the above are satisfied, the judge confirmed that standard recognition and assistance by the Hong Kong court will be rendered to the liquidator appointed in a jurisdiction with similar insolvency regimes to Hong Kong, granting substantially similar powers to those the liquidator is empowered in that jurisdiction on the papers.<\/p>\n\n\n\n