Hong Kong Court Recognises Mainland Court-supervised Restructuring Proceedings In Landmark Decision

The Hong Kong Court has recently handed down a landmark decision in Re USUM Investment Group Limited [2026] HKCFI 1320, addressing the scope of its power to recognise restructurings approved by non-Hong Kong courts and the extent of assistance it may grant. In doing so, the Court recognised restructuring proceedings commenced in the Mainland, clarified the distinction between “recognition” and “assistance” and provided guidance on the principles governing mutual recognition and assistance in cross‑border insolvency matters.

Background

USUM Investment Group Limited (the “Company”) was incorporated in Chongqing and formed part of a 13-company group undergoing consolidated restructuring proceedings before the Chongqing No. 5 Intermediate People's Court (the “Chongqing Court”), with administrators appointed pursuant to the PRC Enterprise Bankruptcy Law ("EBL"). 

The Company's principal connection to Hong Kong is its 100% shareholding in USUM Investment Group Hong Kong Limited ("USUM HK"), which in turn holds a substantial interest in a Hong Kong-listed company.

Although the PRC-appointed administrators assumed control of the Company's assets in the Mainland, they were unable to exercise effective control over USUM HK, including registering changes to its directors. Accordingly, the administrators applied to the Hong Kong Court for recognition of the Mainland restructuring proceedings. 

Decision

First, the Court confirmed that a Mainland bankruptcy restructuring under the EBL constitutes a collective insolvency proceeding capable of recognition at common law, reaffirming the principle in Singularis Holdings Ltd v PricewaterhouseCoopers [2015] AC 1675. The Court also confirmed that the Hong Kong case authorities recognise office-holders appointed not only in the place of incorporation but also at the company's centre of main interests ("COMI"). This approach was endorsed by the Court as being consistent with commercial reality.

Secondly, the Court drew a clear distinction between “recognition” and “assistance”, concepts often conflated in practice. Recognition is a confirmatory acknowledgement of a non-Hong Kong appointed office-holder and powers under the law of the place of incorporation or COMI. In particular, non-Hong Kong office-holders do not require recognition before they can deal with the affairs of the company in Hong Kong; in many cases, production of the relevant court order will suffice. Recognition is only necessary where the appointment is challenged, or where proving authority would otherwise be "cumbersome, costly and time consuming". Assistance, by contrast, concerns the grant of specific domestic relief. Any assistance must be facilitative, necessary and consistent with Hong Kong substantive law and public policy, and cannot enable a non-Hong Kong office-holders to do what they could not do under their own law. 

Thirdly, although the originating summons was framed as one for "recognition and assistance", the administrators ultimately sought only recognition of their appointment and confirmation of their powers. On that basis, the Court found that the criteria for recognition were satisfied: (i) the Mainland restructuring had similar features as orthodox insolvency proceedings and was a "collective insolvency process" conducted under court supervision; (ii) it was commenced in the Company's place of incorporation, which was also its COMI; (iii) there was no public policy impediment to recognition; and (iv) recognition served a necessary purpose in light of the administrators' difficulties in Hong Kong. 

Finally, the Court made clear that its statutory power to sanction a restructuring cannot be exercised in respect of a restructuring approved by a foreign court "as if" it were a domestic scheme of arrangement. In this case, the administrators clarified that they were not asking the Court to assist or give effect to the restructuring plan as a matter of Hong Kong law, and accordingly, the recognition sought was limited only to the appointment of the administrators. 

In light of the above, the Court made an order recognising the Company's Mainland restructuring proceedings and appointment of administrators, allowing the administrators to exercise specified powers in Hong Kong, including obtaining documents and information about the Company from third parties, taking possession of the Company's assets and records, operating the Company's bank accounts, and taking necessary steps to prevent the disposal of the Company's assets.

Comments 

This decision provides clear authority that court-supervised restructuring proceedings commenced outside Hong Kong, in particular PRC restructuring proceedings under the EBL, are capable of recognition at common law in Hong Kong, and that such recognition is not confined to liquidation proceedings. It reinforces the Hong Kong Court's willingness to provide assistance to non-Hong Kong office-holders in insolvency and restructuring proceedings, including in particular PRC restructuring proceedings.

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