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28 Jun 2022

Cross border insolvency – The Court of Final Appeal clarifies the second core requirement in Shandong Chenming case

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Shandong Chenming Paper Holdings Limited v Arjowiggins HKK 2 Limited  [2022] HKCFA 11 (date of judgment 14 June 2022)

The three core requirements are the Court's self-imposed restraints which must be satisfied before the Court will exercise the statutory jurisdiction to wind up a foreign incorporated company. The last occasion in which the Court of Final Appeal (the "CFA") considered the three core requirements is the Yung Kee case. Disputes arising from winding up foreign incorporated companies in recent years are often related to the second core requirement. In this case, the CFA confirmed that the leverage created by the prospect of a winding-up (as opposed to the making of a winding-up order) is a legitimate form of benefit under the second core requirement. 

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