Jurisdiction(s):
United Kingdom

Parallel Offshore Schemes Still Needed: the Rule in Gibbs and the Limits of Recognition and Cross-Border Co-operation (Cayman, Bermuda, BVI; Hong Kong/PRC Restructurings)

Published on: 16 June 2021

Published by a LexisNexis Restructuring & Insolvency expert

Legal News

Article summary

A Introduction

This paper explores whether running parallel schemes of arrangement is either required or desirable when implementing cross-border restructurings for companies incorporated in an offshore jurisdiction (namely the Cayman Islands, Bermuda or the British Virgin Islands (‘BVI’)) whose principal operations or assets, in substance, lie predominantly within an onshore jurisdiction (specifically Hong Kong or the People’s Republic of China).
The issue emerges from certain obiter observations made by Deputy High Court Judge William Wong SC in Da Yu Financial Holdings Ltd [2019] HKCFI 2531 (not reported by LexisNexis®), a case that concerned parallel and inter-conditional schemes of arrangement advanced in both the Cayman Islands and in Hong Kong in respect of a Cayman-incorporated company whose principal place of business, and only significant asset, were situated in Hong Kong.
While approving the Hong Kong scheme, Deputy Judge accepted the necessity of ‘ensuring that scheme creditors cannot derail the orderly working of the scheme by mounting hostile proceedings against the Company in its place of incorporation’. Yet he questioned whether deploying a parallel scheme of arrangement was a suitable means to secure that result ultimately: ‘I am of the view that the idea that...

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