Hong Kong: In The Matter Of CW Advanced Technologies Limited – An Intriguing Decision In Hong Kong Concerning Cross-Border Insolvencies And Restructurings And The New Singaporean Restructuring Regime

Last Updated: 3 August 2018
Article by Naomi Moore and Daniel Cohen
  • The High Court of Hong Kong has handed down an intriguing insolvency and restructuring decision which reaffirms the Hong Kong court's pragmatic approach to cross-border restructuring. The decision addresses, for the first time in Hong Kong, the cross-border aspects of a recently enacted restructuring regime in Singapore which is, in part, modeled on the Chapter 11 debt restructuring framework. 
  • The court raised the possibility that, if the statutory moratorium under the new Singapore regime or a scheme of arrangement facilitated by it can be characterized as a collective insolvency proceeding for common law recognition purposes, the Hong Kong court may be prepared to recognize, and render assistance to facilitate, the Singapore proceedings. The judge asked rhetorically whether the "assistance" in such circumstances could be the appointment of provisional liquidators in Hong Kong – a novel and interesting suggestion since provisional liquidators cannot currently be appointed in Hong Kong on a "soft touch" basis for the primary purpose of facilitating a restructuring.
  • Further, the CW Advanced Technologies Limited (CWATL) decision arguably brings us a step closer to establishing whether a foreign debtor-in-possession restructuring or rehabilitation process, such as a Chapter 11 debt restructuring, is capable of being recognized in Hong Kong. If it is, the decision may in time prove to be an important milestone on the path to the further development of the cross-border recognition and assistance regime in Hong Kong. For now, the decision leaves us with a number of unresolved questions concerning the extent to which collective insolvency proceedings are capable of being recognized in Hong Kong.

Background and Facts

Unlike jurisdictions which have incorporated the UNCITRAL Model Law on Cross-Border Insolvency or similar instruments into their national legislative frameworks, Hong Kong does not currently have a statutory cross-border insolvency regime. In the absence of a statutory regime, the Hong Kong court has developed and applied common law recognition and assistance powers in the insolvency and restructuring context. These powers have typically been exercised in situations in which foreign officeholders, such as liquidators or trustees in bankruptcy, have sought recognition in Hong Kong to enable them to exercise powers available to local Hong Kong officeholders. A number of court decisions have been rendered in this context in recent years and have given rise to a restrained evolution of the common law recognition and assistance regime in Hong Kong.

The CWATL decision was handed down on July 19, 2018 and constitutes the written reasons of the Honorable Mr. Justice Jonathan Harris for his decision to appoint provisional liquidators for CWATL on July 11, 2018. Although the case did not involve an application to recognize and provide assistance to a foreign insolvency officeholder or process, the facts of the case and developments which occurred while the court was seized with it provided an opportunity for Mr. Justice Harris to explore within his written decision a number of important recognition and assistance issues in the restructuring and insolvency context.

The facts of the case concern CWATL, a Hong Kong domiciled company which is part of a group of companies (the CW Group) headquartered in Singapore and in the business of providing precision engineering solutions. The holding company of the CW Group and the indirect parent company of CWATL is CW Group Holdings Limited (CWG), a company incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange.

CW Group fell into financial distress which ultimately led to the termination of a number of its trade finance lines, statutory demands being served on CWG and CWATL by the Bank of China (Hong Kong) Limited (BOC) and subsequent payment defaults under certain of CW Group's debt instruments. CWATL accepted that the CW Group (including CWATL) was unable to pay its debts and was cash flow insolvent.

The CW Group proposed to address the group's financial difficulties through a debt restructuring. A restructuring advisor was appointed in Singapore and, on June 22, 2018, CWG, CWATL and two of CW Group's Singapore-domiciled subsidiaries made an application to the Singapore High Court under section 211B of the Singapore Companies Act for a six-month moratorium (the Singapore Moratorium) to allow CW Group to attempt a restructuring of its debts by proposing a compromise or arrangement with its creditors (the Singapore Application). The Singapore Application triggered a statutory 30-day automatic moratorium from the date of filing of the application.

Following the Singapore Application, CWATL presented a petition for its own winding-up in Hong Kong and applied to the Hong Kong court for the appointment of provisional liquidators in order to preserve CWATL's assets and avoid a "free-fall" winding-up.

At the initial hearing on June 27, 2018 of CWATL's application to appoint provisional liquidators in Hong Kong, BOC did not object to the application but proposed its own nominees as provisional liquidators in lieu of those nominated by CWATL. The hearing was adjourned, in large part because Mr. Justice Harris was of the view that the case raised issues of importance concerning the impact in Hong Kong of the Singapore Application and the automatic moratorium. The court requested the Official Receiver of Hong Kong to provide amicus assistance on such issues.

In the meantime, winding-up petitions were presented and separate provisional liquidation applications were filed in respect of CWG in the Grand Court of the Cayman Islands by CWG and BOC, respectively. CWG's application sought the appointment of "soft touch" provisional liquidators with a view to supporting CWG's intention of making a compromise or arrangement with its creditors. BOC filed its own, competing, application for different provisional liquidators.

In light of these and other developments and CWATL's limited resources, CWATL applied to withdraw its own application for the appointment of provisional liquidators in Hong Kong, and BOC subsequently filed its own application for provisional liquidators to be appointed to CWATL in Hong Kong. When the matter returned to court on July 11, 2018, Mr. Justice Harris granted BOC's application for the appointment of provisional liquidators in respect of CWATL noting that the relevant criteria had been fulfilled.

The Decision

While no other substantive orders (costs aside) had been sought, Mr. Justice Harris used the opportunity of providing written reasons for his July 11, 2018 decision to appoint provisional liquidators for CWATL to provide some important observations about the situation in the larger cross-border context.

The court noted its belief that CW Group intended to conduct a group-wide restructuring through a Singapore Moratorium and associated scheme of arrangement, with recognition and assistance given by other relevant jurisdictions in which the CW Group members are located. This, indicated the court, was the context within which CWATL had made its application in Hong Kong for the appointment of provisional liquidators.

At the same time, the court also noted that CW Group's Singapore-based restructuring efforts had not progressed as planned in the sense that BOC had opposed CWATL's attempt to appoint provisional liquidators and was arguing that the Singapore Moratorium could not be recognized in Hong Kong. The situation prompted Mr. Justice Harris to observe that, where, as here, a Singapore Moratorium is involved in a cross-border restructuring process, thought should be given to whether the moratorium is eligible for recognition in Hong Kong and, if it is, whether the court may grant assistance by way of appointing provisional liquidators.

Solving the Cross-border Challenges Is for Another Day

Having raised such a tantalizing prospect, Mr. Justice Harris did not attempt to provide any definitive answers or guidance on whether the Singapore Moratorium would be capable of recognition in Hong Kong or the assistance the court might provide if recognition was a possibility. Instead, he set out three "unresolved questions" (and some related observations) of relevance to the analysis, being, in summary:

  1. the true nature of the Singapore Moratorium and whether it should be treated as a collective insolvency proceeding;
  2. whether a collective insolvency proceeding which is not conducted within the jurisdiction of domicile of the company concerned (such as the Singapore Moratorium so far as it relates to CWATL) is capable of being recognized in Hong Kong (noting an absence of Hong Kong authority on this point); and 
  3. the assistance that could be rendered by the court in this context and, in particular, whether the assistance could be by way of the appointment of provisional liquidators (a thought-provoking question given the absence of any "soft touch" provisional liquidation regime in Hong Kong currently).

Mr. Justice Harris remarked that the cross-border challenges encapsulated by these questions were for another day, so we will need to wait for another case involving suitable facts for a decision that can provide clarity on these issues. For now, Mr. Justice Harris underscored the need for careful planning in respect of insolvency filings in cross-border cases and reiterated to policy makers the need for a statutory cross-border insolvency regime in Hong Kong.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions