Shanghai China

Cross-Border Insolvency Proceedings & Cooperation Arrangement

In the recent case of Re Trinity International Brands Limited [2023] HKCFI 1581, the Hong Kong Court acceded to the Hong Kong liquidators’ application and issued a Letter of Request in seeking assistance from the Mainland Court in Hong Kong insolvency proceedings.  The relevant mechanism is set out in the Cooperation Arrangement, which is set out in the Record of Meeting signed by the Supreme People’s Court (“SPC“) and the Secretary for Justice on 14 May 2021 (the “Cooperation Arrangement”).  The SPC and Hong Kong’s Department of Justice issued an opinion and a Practical Guide respectively, with the SPC designating the Intermediate People’s Courts of Shanghai, Xiamen and Shenzhen (collectively the “Pilot Areas“) to take forward pilot measures.


Re Trinity is the latest amongst a line of cases where the Hong Kong Court acceded to local applications and issued letters of request to Mainland courts pursuant to the Cooperation Arrangement.

In this case, the Hong Kong liquidators (the “Liquidators“) sought an order to issue a letter of request to the Shanghai No.3 Intermediate People’s Court (the “Shanghai Court“) for recognition of the liquidation of Trinity International Brands Limited (“Trinity Company“) and assistance in taking control over Trinity Company’s Shanghai subsidiary (“Trinity Shanghai“). The Court of First Instance (“CFI”) was tasked to decide if this was an appropriate case to grant such an order.

Principles under the Cooperation Arrangement and the CFI’s Ruling

In order to obtain an order seeking Mainland court’s assistance from the Hong Kong Court, the applicants should ensure (1) the requirements pursuant to the Cooperation Arrangement are complied with (the “Cooperation Threshold“); and (2) the recognition and assistance sought are necessary to facilitate the applicants to discharge their functions as liquidators (the “Necessity Threshold“).

The Cooperation Threshold comprises the following criteria:-

  1. The application is made by a liquidator in insolvency proceedings in Hong Kong (“HK liquidator”). This includes compulsory winding up, voluntary winding up, and scheme of arrangement provided by a liquidator or provisional liquidator and sanctioned by the Hong Kong Court (“HK Insolvency Proceedings”);
  2. The recognition and assistance are sought from a court at one of the Pilot Areas;
  3. The order sought is for recognition of the HK liquidator’s office, and grant of assistance for discharge of his duties; and
  4. Hong Kong has been the centre of main interests (“COMI”) of the company in liquidation continuously for at least 6 months.

The Cooperation Threshold and Necessity Threshold satisfied in the present case

In the present case, the Hong Kong Court agreed with issuance of a letter of request to the Shanghai Court for reasons as follows:-

  1. The proceeding at issue was a collective insolvency proceeding promoted by the liquidators;
  2. The Cooperation Arrangement applied in the present case, as the Shanghai Court is a court of the Pilot Areas;
  3. The order sought was for recognition of the Liquidators’ office and assistance to discharge their duties;
  4. The COMI of Trinity Company was continuously Hong Kong, for at least six months prior to the application, and in particular, Trinity Company’s place of incorporation, business and liquidation were Hong Kong;
  5. Trinity Company’s principal asset was located in Shanghai (i.e. 100% equity in Trinity Shanghai); and
  6. The Liquidators required the Shanghai Court’s recognition and assistance to facilitate performance of their duties by taking control over Trinity Shanghai (thereby satisfying the Necessity Threshold).

Key Takeaways

The Cooperation Arrangement denotes Hong Kong as the first jurisdiction with an established mutual recognition and assistance mechanism in insolvency proceedings with Mainland China. As the reach of Hong Kong and Mainland insolvency officeholders extends across the border, business people may rest assured that legal practitioners have become better placed to facilitate liquidation with cross-border features.

When applying to Hong Kong Courts seeking recognition and assistance, future applicants are recommended to closely adhere to the SPC’s Opinion and the Practical Guide.  Rather than merely relying on standard forms from previous cases, the letters of request and the orders sought should be drafted with precision and tailored to suit the parties in question.

Read more about the mutual recognition and assistance in Mainland-Hong Kong insolvency proceedings, particularly how Mainland-Appointed Administrator obtains Hong Kong Court’s recognition.

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