Author

Kwun-Yee Cheung

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Introduction The bankruptcy regime was a major milestone for China. For the first time in its history, China now has a unified and comprehensive bankruptcy system covering all types of enterprises, including foreign investment vehicles and state-owned enterprises. Similar to many jurisdictions, the bankruptcy regime uses key concepts such as: Voluntary and involuntary bankruptcy; An independent administrator; Involvement of creditors in the administration of the bankruptcy; Restructuring and settlement; Extraterritoriality, allowing property outside China and certain foreign proceedings to…

In Lasmos Ltd v. Southwest Pacific Bauxite (HK) Ltd (02/03/2018, HCCW 277/2017), [2018] HKCFI 426 (“Lasmos“), the Court of First Instance held that a winding-up petition based on a disputed debt may be dismissed if there was an arbitration clause in the underlying agreement, upon which arbitration has commenced.

This decision broadens the traditional ground of dismissal, which previously required the subject company to demonstrate that it had a bona fide defence on substantial grounds to the underlying debt. The decision also clarifies the circumstances where winding-up proceedings will prevail.