2023 was a busy year for the restructuring and insolvency industry in Hong Kong. we had a ground breaking decision of the Court of Final Appeal (CFA) ruling on the conflict between dispute resolution clauses and the Court’s jurisdiction to wind-up/bankrupt a debtor. We also saw the court extend and strengthen its reach to assist insolvency officeholders (whether appointed in Hong Kong or elsewhere). 

Although particular scheme cases are not discussed below, Hong Kong cemented its position as a restructuring hub. From reported decisions at least 8 schemes of arrangement were sanctioned compromising debts in the amount in excess of HK$22.2 billion, and this is not including other ongoing restructurings in the news, various large Mainland property developers such as Logan Group and Kaisa.

As we move into 2024, the Restructuring and Insolvency team at Tanner De Witt look back at 5 important insolvency cases (sorted chronologically) handed down in 2023.

  1. Re Gatecoin Limited [2023] 2 HKLRD 1079

Judgment handed down by the Honourable Madam Justice Linda Chan on 31 March 2023


The company operated a cryptocurrency exchange platform which collapsed in 2019. The judgment concerns the liquidators’ application seeking directions on the characterisation of cryptocurrencies as “property” and how such assets should be treated.

The Court reviewed and adopted various authorities from other common law jurisdictions and held that cryptocurrencies are “property”.  Crypto currencies are definable (the public key being distinctly allocated to an accountholder), identifiable by third parties, transferable, actively traded and have some degree of permanence or stability.

In holding that cryptocurrencies are “property”, the Court held that they could be the subject matter of a trust although in this particular case the applicable contract between the customer and the company did not give rise to a trust.

This is an important decision clarifying how cryptocurrencies are dealt with in liquidations.  The Court took a liberal interpretation of the definition of “property” within our legislative framework which will no doubt assist practitioners in dealing with other types of crypto assets.

  1. Re Guy Kwok Hung Lam (2023) 26 HKCFAR 119

Judgment handed down by the Court of Final Appeal (NPJ French giving the unanimous judgment) on 4 May 2023


The Court of Final Appeal upheld the Court of Appeal’s decision in overturning a bankruptcy order. The Court unanimously held that in an ordinary case where the underlying dispute relating to a debt on which a petition is based is subject to an exclusive jurisdiction clause in favour another jurisdiction (New York in this case), the Hong Kong court should decline to exercise its jurisdiction to wind up/bankrupt debtors unless there were countervailing factors. These factors might include the risk of the debtor’s insolvency impacting third parties, the debtor’s reliance on a frivolous defence, or an occurrence of an abuse of process.

This landmark decision highlights the importance placed by the Court holding parties to their contractual bargain.  It is also an important extension of the Court of Appeal decision in Re But Ka Chon [2019] 4 HKLRD 85 (see TDW’s article) which held that although the presence of an arbitration clause is a weighty factor, the Court could still exercise its jurisdiction to make a bankruptcy order.

There will be further development in this space as two conflicting first instance decisions concerning the application of Re Guy Lam are being appealed. In Simplicty & Vogue Retailing (HK) Co., Limited [2023] HKCFI 1443, the Court declined to apply the Re Guy Lam principle when the underlying debt was governed by an arbitration clause. In contrast, the Court in the latest saga of the Re Shandong Chenming Paper Holdings Limited [2023] HKCFI 2731 dispute stayed the winding up proceedings and held that Re Guy Lam is applicable where arbitration clauses are concerned.

The Guy Lam dispute also led to a subsequent novel decision of the Court of Appeal dealing with the Trustees’ costs and expenses (see Re Guy Lam [2023] 5 HKLRD 463). It was held that the Trustees’ costs and expenses properly incurred could be paid out of the bankruptcy estate and the diminution of the estate could be claimed by the discharged bankrupt against the petition. Tanner De Witt acted for the Trustees in this application and the relevant article can be accessed here.

  1. Re Guangdong Overseas Construction Corporation [2023] 3 HKLRD 262

Judgment handed down by the Honourable Madam Justice Linda Chan on 17 May 2023


The company is a private company established in the Mainland. A bankruptcy order was made against it pursuant to the Enterprise Bankruptcy Law applicable in the Mainland and administrators were appointed. The company holds a substantial interest in a subsidiary in Hong Kong.

The Guangzhou court issued a letter of request to the Hong Kong court requesting recognition and assistance for the administrator.

Pursuant to the cooperation mechanism between the Mainland and Hong Kong, an administrator in Mainland bankruptcy proceedings can apply to the Hong Kong Court for recognition provided that, inter alia, the request was initiated by a court in one of the pilot areas (Shanghai, Xiamen or Shenzhen).

Although the request was made by a court that was not from one of the pilot areas, the Court clarified that the cooperation mechanism merely conferred the manner in which an application is made but the jurisdiction in any event is found in the common law. Given this, provided that the usual requirements are satisfied (collective insolvency proceedings, the proceedings are conducted in the company’s COMI jurisdiction and the assistance is necessary for the administration of the winding up), an administrator of a Mainland company in bankruptcy outside of the pilot areas could still be recognised in Hong Kong.

This decision is important in laying the foundation of further cooperation between Mainland and Hong Kong liquidations. It provides clarification that common law principles are applicable to companies originating from non-pilot areas, and could lead to an influx of more administrators seeking assistance from the Hong Kong courts.

  1. Nuoxi Capital Limited & Others v Peking University Founder Group Company Limited [2023] HKCFI 1350

Judgment handed down by the Honourable Mr Justice Harris on 18 May 2023


The Defendant, a Mainland parent company, entered into several materially identical keepwell deeds with its BVI and Hong Kong subsidiaries to “keep well” certain bonds issued by those subsidiaries in respect of their ability to meet payment obligations. Notably, one of the undertakings was for the Defendant to, through its best efforts, obtain regulatory approval to perform its keepwell obligations once they have been triggered.

The Defendant fell into financial difficulties and commenced reorganisation in the Mainland. Likewise, the offshore issuers went into liquidation and submitted claims in the Mainland reorganisation on the basis of the Defendant’s obligations under the keepwell deeds. Those claims were however rejected thus prompting the issuers to commence proceedings in Hong Kong in accordance with the dispute resolution clauses in the deeds.

The Court held that (i) keepwell deeds are enforceable contractual obligations; but (ii) the parent company would be relieved of its obligations where it could be shown that, having used its best efforts, it was not possible to obtain the relevant regulatory approval to perform its keepwell obligations. The Court was satisfied that the Defendant could rely on the best efforts defence on obligations which arose after it went into reorganisation where it was no longer possible for it to obtain the relevant regulatory approval.

Keepwell deeds are a common feature of financing between Mainland business groups and foreign lenders to give assurance as to the solvency of the groups’ subsidiaries. Prior to this decision, the legal status of keepwell deeds was uncertain, giving rise to practical concerns as to their enforceability. This decision declared and confirmed that keepwell deeds are enforceable which lays the foundation on similar claims being made by liquidators in the future.

Soon after this decision, the Court handed down the decision of Citicorp International Limited v Tsinghua Unigroup Co., Limited [2023] HKCFI 1572, where the same issue was dealt with – also by Harris J. The major difference between the two cases were that the default on bonds by the Founder Group took place after its reorganisation, whereas that of the Tsinghua Group took place before its reorganisation. Tsinghua Group was unable to raise the “best effort defence”.

Importantly, to address concerns that the Mainland courts will not give weight to the findings of the Hong Kong court, Harris J made an obiter remark that “one of the advantages Hong Kong’s common law legal system gives China is a judiciary, which is able to determine disputes governed by the common law if that is what the parties to commercial contracts choose… it would be remarkable if the Beijing Court took no notice of the Hong Kong court’s opinion.”

  1. Re China Properties Group Ltd (in liquidation)  [2023] 4 HKLRD 811

Judgment handed down by Recorder William Wong SC on 9 September 2023


The company was incorporated in the Cayman Islands and listed on the main board of the SEHK. It was wound up by the Hong Kong Court on insolvency grounds.

The liquidators of the company faced great difficulties in taking control of certain BVI subsidiaries and gaining access to the books and records of the subsidiaries. This was mainly because a former director had challenged the steps taken by the liquidators to appoint one of the liquidators as the director of the BVI subsidiaries. The liquidators therefore made an application in Hong Kong seeking an order to compel the former director to sign resolutions to ratify the liquidator’s appointment as director and to resign as a director.

The learned Recorder granted the order sought. In doing so, the Recorder emphasised the importance for the Court to extend its assistance to Hong Kong liquidators as much as it can in order to facilitate an orderly, speedy and cost effective liquidation in the interest of all stakeholders. It also emphasised that former directors should cooperate with the liquidators instead of obstructing the liquidators in carrying out their statutory duties. The Court therefore held that it would not be oppressive for it to exercise in personam jurisdiction over the former director in granting the interim relief sought.

This is an important decision showing the Court’s willingness to exercise its in personam jurisdiction in granting orders that may interfere with the operation of a foreign company (i.e. the BVI subsidiaries). It is emphasised that this is an instance of the Hong Kong court assisting Hong Kong liquidators where the court has in personam jurisdiction over the respondent. The Court therefore did not usurp the jurisdiction of the BVI Court (the subsidiaries’ place of incorporation).

In obiter, the Court suggested that, in granting a winding up order, the Court could in the future include provision to require former directors to sign resolutions to formally give effect cessation of their office and to “recognise” the appointment of the liquidators. Practitioners will no doubt be eager to incorporate such wording in the future particularly where there is evidence to suggest that cooperation from former directors may not be forthcoming.


Honourable mentions go to Re Leading Holdings Group Limited [2023] 4 HKLRD 71 and Re China Oceanwide Group Limited [2023] HKCFI 455 which set out helpful analysis on the standing of bondholders in presenting petitions. In short, practitioners should consider the terms of the indentures carefully when advising their clients whether to present a petition as a bondholder. For further information, Tanner De Witt’s article on the importance of Re Leading Holdings Group Limited can be accessed here.

As foreshadowed above, there will undoubtedly be further important developments in the Restructuring and Insolvency practice in 2024 and the team at Tanner De Witt will continue to monitor those developments closely.

Author: Ian De Witt and Tim Au

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