London Daily

Focus on the big picture.
Wednesday, Jul 30, 2025

Hong Kong resurrects Chapter 11-style corporate rescue bill after a 24-year hiatus as Singapore powers ahead with reforms

Hong Kong resurrects Chapter 11-style corporate rescue bill after a 24-year hiatus as Singapore powers ahead with reforms

The government plans to finalise its proposal and potentially table a bill during the legislative session beginning in October, official saysใ The plan, first mooted in 1996 during its British colonial days, was opposed in past attempts by some lawmakers and unionists

Hong Kong plans to introduce Chapter 11-style provisions in its corporate rescue laws to shield debt-stricken companies from hostile acts while they reorganise their finances, revisiting a holdover from colonial days that failed to pass in various attempts through major financial crises.

The government intends to hold a new round of consultation in the coming months, before possibly putting a draft bill to the Legislative Council after the session in October, the Financial Services and the Treasury Bureau said in an email reply to South China Morning Post. A statutory corporate rescue procedure and insolvent trading provisions are being drafted, it added.

A key part of the proposal may include giving debtors a six-month moratorium from hostile acts, such as winding-up or liquidation proceedings, while they work on rehabilitation plans or find white knights, according to people involved in the discussions.

The move underlines the government’s efforts to prevent a wider implosion in corporate failures after gross domestic product economy shrank last year for the first time since the global financial crisis. Anti-government protests and the coronavirus outbreak have now brought many pillars of the economy to their knees.

“I have already urged the government to speed up the process of introducing a proper corporate rescue legislation, as that is important for Hong Kong as an international financial centre,” said Johnson Kong, president of the Hong Kong Institute of Certified Public Accountants. The law is “very urgently needed” as the current financial crisis is threatening to push thousands of companies into liquidation, he added.

The Law Reform Commission mooted the proposal in 1996, before the onset of Asian financial crisis in 1997. A bill introduced in 2001 failed to pass, and was later modified through the Sars outbreak in 2003 and the global financial crisis in 2008, only to stumble because of opposition from some lawmakers and unionists seeking to protect workers’ rights.

“Given the complexity and technicalities of the bill as well as the concerns expressed by various stakeholders in previous exercises, we will organise a fresh round of engagement with stakeholders on specific areas in the draft bill in the next few months,” the Bureau spokesman said in a written reply to the Post. It intends to finalise the bill for introduction in the first half of the 2020-21 legislative session, he added.

Under Chapter 11 of the US bankruptcy code, debt-stricken companies can petition for automatic debt moratorium with global effect. Its Chapter 15 allows foreign companies to apply for worldwide recognition of debt workout agreements consented by courts in local jurisdictions.

After its handover to China from the UK in July 1997, the Hong Kong government has held consultations with industry players through 2018 on the corporate rescue laws, without making any headway. India and Singapore took advantage of Hong Kong’s inertia to reform their insolvency law in 2016 and 2017.

Singapore amended its Companies Act in March 2017 by infusing some key features of the US Bankruptcy Code, giving companies access to independent judicial managers to devise recovery plans and find rescue financing, among others. The measures, akin to regimes enacted in the UK and Australia, are aimed at achieving a higher asset-recovery rate to repay creditors.

"The proposed corporate rescue bill, if it passes, will increase the chances for companies in finding their white knights according to international practice,” HKICPA’s Kong said.

Without such protection from hostile creditors, companies in Hong Kong are immediately exposed to winding-up or liquidation threats from any single creditor, putting their assets at risk of fire sales, according to Derek Lai Kar-yan, vice-chairman of Deloitte China.

“The lack of corporate rescue procedures have made it difficult for liquidators to do their jobs,” Lai said. “At presents, we will need to convince all creditors one by one to request them not to submit any winding-up petition, to give more time for companies to restructure. It will be beneficial to have this corporate rescue legislation.”

While Hong Kong’s corporate bankruptcies are far from alarming by its historical standard, Asia’s third-largest capital market is missing out on diversifying its services economy by luring more advisory firms and distressed-debt investors to the city.

With its reforms, Singapore touted the city as a regional restructuring hub, seeking to ride the spectacular boom and bust of mainly mainland Chinese companies that fuelled the growth of Asia’s US$1.1 trillion dollar-bond market over the past 10 years.
Mat Ng, a partner of EY, said Hong Kong need to introduce the corporate rescue legislation to compete with its regional rivals.

“If Hong Kong wants to compete with other major financial centres, we should make sure our financial legislation can match them” on global standards, he said. “Singapore and India have introduced their measures. The government should work harder to make the changes as soon as possible.”

Newsletter

Related Articles

0:00
0:00
Close
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
×