Scheme of arrangement for creditors in Hong Kong : enhancing Hong Kong's scheme and lessons from Australia

Last year and the year before, two articles published in International Corporate Rescue had highlighted some of the problems with corporate rescue in Hong Kong. This article builds on some of the matters previously raised and looks at the recent amendments to the major company law re-write in Hong Kong that have implications for scheme of arrangement for creditors. In addition, put forward suggestions to enhance the use scheme for creditors as well as draw from Australia’s statutory provisions to see if it could offer any lesson for Hong Kong. In view of the fact that Hong Kong has yet to enact formal corporate rescue procedures, enhancing existing measures is perhaps the most practicable way to encourage creditors in Hong Kong to explore the use of corporate rehabilitation instead of liquidation as a debt recovery mechanism.