China News Service, Beijing, May 14th, title: Hong Kong and the Mainland mutually recognize bankruptcy procedures, a great business environment

  China News Agency reporter Chen Xiaoyuan

  The "Minutes of the Talks on Mutual Recognition and Assistance in Bankruptcy Procedures between the Mainland and Hong Kong Special Administrative Region Courts" was signed in Shenzhen on the 14th, marking that Hong Kong and the Mainland reached a consensus on recognizing and assisting in bankruptcy procedures.

This is an important exploration of the connection between Hong Kong and the Mainland's rules and mechanisms, which will help to further optimize the business environment and promote economic and trade cooperation between Hong Kong and the Mainland.

This is a new development in the practice of "one country, two systems" in the judicial field.

  Since the return of Hong Kong, a legal system different from that of the Mainland has been implemented under "one country, two systems".

Taking into account the differences in judicial practice, Article 95 of the Hong Kong Basic Law stipulates that the Hong Kong Special Administrative Region and judicial organs in other regions of the country may conduct judicial contacts and provide mutual assistance through consultations in accordance with the law.

  According to actual needs and development of the situation, Hong Kong and the Mainland have previously signed eight civil and commercial judicial assistance arrangements, covering mutual recognition and enforcement of arbitral awards and court decisions, service of documents, and extraction of evidence.

However, due to the significant differences in the bankruptcy system, judicial assistance in this field has been difficult to progress for a long time.

  In recent years, especially with the continuous advancement of the Guangdong-Hong Kong-Macao Greater Bay Area, mutual investment between Hong Kong and the Mainland has gradually increased, and more and more companies have assets and liabilities in both places.

Due to the large differences in the bankruptcy system and the ineffectiveness of the bankruptcy procedures, the two places face greater difficulties in dealing with the bankruptcy of mutually involved enterprises.

  In response to this issue, the Supreme People’s Court and the Hong Kong Special Administrative Region Government signed the above-mentioned "Minutes of the Talks" on the basis of full argumentation and consultation. The designated pilot district courts and the Hong Kong courts will carry out mutual recognition and assistance in bankruptcy procedures.

  The "Minutes of the Talks" and relevant pilot opinions involve delimiting pilot areas, defining the scope of application, stipulating legal effects, and standardizing assistance methods, etc., and will create a new model of judicial assistance between the two places.

  Among them, taking into account factors such as the scale of mutual investment with Hong Kong and the number of Hong Kong-funded enterprises, the pilot areas in the Mainland are designated as Shanghai, Xiamen and Shenzhen, and the relevant courts in the pilot areas can recognize and assist Hong Kong based on the opinions of the pilot. Bankruptcy proceedings.

  This cross-border bankruptcy assistance mechanism will cover corporate bankruptcy reconciliation and reorganization procedures in the Mainland, as well as Hong Kong’s debt restructuring procedures. It can speed up the liquidation of "zombie companies" and rescue distressed companies through reorganization, and unblock market factors such as goods, personnel, and capital. Flow and stabilize market transaction expectations.

  Under the new mechanism, the assets of related debtors and the interests of creditors are expected to be better protected, and the bankruptcy liquidation and reorganization procedures will be more efficient and orderly.

These are all conducive to boosting the confidence of cross-border investors, further optimizing the business environment, and promoting economic and trade cooperation between Hong Kong and the Mainland.

  At present, the construction of the Guangdong-Hong Kong-Macao Greater Bay Area is progressing steadily. To further deepen cooperation between Hong Kong and the cities in the Greater Bay Area, more rules and mechanisms are needed.

The mutual recognition and assistance of bankruptcy procedures and related trials between Hong Kong and the Mainland this time can also provide a reference for the connection of rules and mechanisms in different cities in the Greater Bay Area.

As cooperation in more and more fields becomes smoother, it will help Hong Kong citizens better grasp the development opportunities in the Mainland and integrate into the overall development of the country.

  In addition, with the deepening of economic globalization, cross-border bankruptcy assistance has increasingly become an important part of international and interregional judicial cooperation.

The establishment of a cross-border bankruptcy assistance mechanism between Hong Kong and the Mainland will also help the country explore the integration of relevant fields with the international community and better serve the new domestic and international "dual cycle" development pattern.