In Re USUM Investment Group Ltd [2026] HKCFI 1320, the Hong Kong Companies Court delivered a landmark judgment concerned with “novel and important questions as to whether the court has power to recognize a restructuring approved by a foreign court and, if so, the extent of such assistance”.
In granting the application sought by the Administrators appointed by the Chongqing No. 5 Intermediate People’s Court, the judgment provides an authoritative framework for future cross‑border restructuring cases and strengthens Hong Kong’s role as a leading common law insolvency jurisdiction.
The application arose from the consolidated bankruptcy restructuring of USUM and 12 related Mainland companies under the PRC Enterprise Bankruptcy Law. Administrators appointed by the Chongqing Court sought recognition in Hong Kong to exercise control over USUM’s key Hong Kong asset: its 100% shareholding in USUM HK, which in turn held a substantial stake in a Hong Kong‑listed company. The Administrators however faced various difficulties including the inability to register the relevant changes of directorships.
Given the vast number of applications for recognition and assistance coming to the Hong Kong Court and the importance of the issues raised, it was considered by Linda Chan J to be desirable for the court to discuss relevant first principles, with a view to developing the law in this area in a coherent and principled manner. The Court appointed learned amica curiae (Ms Eva Sit SC and Mr Jonathan Fung) to assist the Court on this matter, whose submissions were in tandem with the submissions advanced on behalf of the Administrators.
In a detailed 65-page judgment, the Court first made clear the conceptual distinction between recognition and assistance. Simply put: recognition, grounded in private international law, concerns acknowledging the status and powers of foreign office‑holders; assistance, by contrast, involves the Hong Kong court exercising or conferring additional powers, subject to the strict limits articulated in the leading opinion of the Judicial Committee of the Privy Council in Singularis.
The Court further held that common law recognition extends beyond liquidations to foreign collective insolvency proceedings, including court‑supervised restructurings arising in the course of insolvency proceedings. In the present case, the Chinese Mainland restructuring satisfied this requirement. This clarification aligns Hong Kong with modern cross‑border insolvency practice, despite the absence of the UNCITRAL Model Law.
The Judgment also makes clear that the Hong Kong Court could not simply enforce or “give effect to” the substantive terms of a foreign restructuring plan as if it were a domestic scheme of arrangement. Relying on Singularis and distinguishing Cambridge Gas, the Court emphasised that common law assistance cannot override domestic substantive law or statutory safeguards.
The Court moreover highlighted that the relevant principles are consistent with and can be fully accommodated under the “Cooperation Mechanism” established pursuant to the “Record of Meeting between the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition and Assistance to Bankruptcy (Insolvency) Proceedings between Courts of the Mainland and of the Hong Kong Special Administrative Region”. In particular, whilst the instant case does not fall within the Cooperation Mechanism, the Court reiterated that the source of the Hong Kong Court’s jurisdiction under the Cooperation Mechanism remains common law, and there is no principled distinction between Chinese Mainland courts in the Pilot Areas (under the Cooperation Mechanism) and elsewhere.
In respect of the present application, the Court accepted that all the criteria for recognition are satisfied, particularly that (i) the consolidated restructuring proceedings are collective insolvency proceedings, being a court-supervised insolvency process intended to regulate the rights of creditors of companies that are insolvent; (ii) the consolidated restructuring proceedings are brought in the Company’s place of incorporation, which is also the Company’s COMI; (iii) there is no public policy concern that would warrant declining recognition; and (iv) necessity for the recognition order sought is demonstrated by the evidence.
Read the judgment here: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=177948&currpage=T
Mr José-Antonio Maurellet SC, Mr Michael Lok and Mr Charlie Liu (instructed by Dentons Hong Kong LLP) acted for the Administrators.
