The recently signed agreement between the Hong Kong and Chinese judiciaries for the mutual recognition and provision of assistance in insolvency matters will have a considerable impact on Hong Kong’s position as a leader in cross-border insolvency enforcement, particularly where creditors have assets in China.

The signing launches a regime between Hong Kong and three pilot areas in China—Shanghai, Shenzhen and Xiamen—with the intention of gradually extending beyond these areas. Hong Kong liquidators may now apply to the Mainland courts for the recognition of insolvency proceedings in Hong Kong, while Mainland bankruptcy administrators may apply to the Hong Kong courts for the recognition of bankruptcy proceedings in the Mainland.