Annual Insolvency Law and Practice Conference

On 9 March 2017, the Hong Kong Law Society’s Academy of Law launched its inaugural Annual Insolvency Law and Practice Conference. The hugely popular event took place in a packed auditorium of the Hong Kong Exhibition Centre with over 300 delegates. In attendance were members of the legal and financial press who had been invited to report on recent landmark restructuring rulings of the Companies Court, a division of the Court of First Instance of Hong Kong, as well as topical issues.

Keynote speaker, Mr. Justice Jonathan Harris, spoke on a panel with offshore litigation lawyer Ian Mann of Harneys; the panel was moderated by Hong Kong barrister, Victor Joffe QC of Temple Chambers.  

Melissa Pang, Vice President of the Law Society, opened the conference with a rousing call to practitioners to focus on training and continuing professional development in this particularly exciting area of law.  Ms. Pang noted the increasing regional insolvency and restructuring work and the skill of Hong Kong practitioners.

Ms. Christina Cheung, a law officer of the Department of Justice of the HKSAR Government noted the commitment of government to this area of law and the continuing development and improvement within the profession.

Mr. Keith Ho of Wilkinson & Grist and Chairman of the Insolvency Law Committee promised an exciting inaugural conference addressing a number of live issues.

In what is thought to be first in legal history, Mr. Justice Harris’ panel included pre-recorded video commentary from judges of three of the major offshore jurisdictions – the BVI, the Cayman Islands and Bermuda.  The audience watched in palpable amazement as the four judges comments were delivered to them in a dynamic panel.  Having access to extra-judicial comments from four eminent judges of the various jurisdictions in an interactive and engaging panel was the highlight of the day. 

The four jurisdictions share a proud history with the UK and are bonded forensically and culturally by the common law.  An increasing number of applications are made by offshore liquidators to the Hong Kong Court for “recognition and assistance” by way of “common law recognition”.  Mr. Justice Harris enthralled the assembled lawyers with the reasoning behind his landmark decision in The Joint Official Liquidators of A Company v B Company [2014] HKEC 1244 and the many cases that have followed.  He also discussed the idea of recognising an offshore provisional liquidator, the tool for restructuring in those places, such that parallel schemes of arrangement could take place between an offshore court and the Hong Kong court.  This was a creative way to recognise restructuring in a way that might otherwise not be available.

Ian Mann noted that as a non-Hong Kong lawyer and “a consumer of Hong Kong legal services” he was delighted with the Hong Kong Court’s progressive approach to recognising offshore liquidations as well as parallel restructuring.  He noted that Hong Kong “is the de facto restructuring hub of Asia” with an “innovative and quality first instance court that Hong Kong lawyers should be proud of”.  He noted “there is no other Court in the world driving the boundaries of common law assistance as much as Hong Kong – with perhaps the exception of Bermuda”.

Justice Barry Leon of the Commercial Division of the BVI High Court spoke by video on the recent Judicial Insolvency Network, a network of judges who have proposed a protocol for co-operation in cross-border insolvency cases for the efficient disposal of cases. 

Chief Justice Anthony Smellie of the Grand Court of the Cayman Islands spoke by video citing recent cases of cross-border insolvency co-operation between the courts of the Cayman Islands and Hong Kong.

Chief Justice Ian Kawaley of the Bermuda Supreme Court spoke of the flexibility of the Bermuda provisional liquidator as a restructuring tool that could then be recognised, if appropriate, by a Hong Kong Court.

Camille Jojo of Norton Rose and a member of the Insolvency Law Committee, Phyllis McKenna, the Official Receiver, and Dr. Stefan Lo, Deputy Principal Government Counsel (acting) of the Department of Justice, had a lively panel discussion outlining proposed legislative reforms that would create a “provisional supervision” and would allow Hong Kong companies to enter into a legal breathing space to restructure their financial and operational structures when they are in financial difficulty.  Employee protection featured strongly as the backdrop to these reforms.

Ian de Witt of Tanner de Witt, Rupert Purser of Burford Capital and Edward Middleton of KPMG conducted a humorous and thoughtful panel discussion on the use of litigation funding in insolvency matters.  The discussion was refreshingly in-depth and practical. Edward Middleton unabashedly probed funder, Rupert Purser, about what threshold he would have to meet to obtain funding in any particular case.  The panel heard the exact returns that funders look for, as well as the necessary due diligence that is conducted.

In what to many was an eye-opening detailed discussion on the trading, purchasing and restructuring of non-performing loans, Keith Ho, Theron Alldis of SC Lowy, Paul Forgue of Alvarez & Marsal and Ian Mann rounded off the day.  The panel asked Theron Alldis to reveal the secrets of how one makes money out of non-performing loans and an impressive discussion of financial restructuring, negotiations with stakeholders, an understanding of the underlying business of a debtor ensued.