China's liquidation laws could make rising bankruptcies painful for foreign investors

An expected increase in mainland corporate bankruptcies may pose challenges for foreign creditors in Hong Kong and elsewhere thanks to differences between court and legal proceedings for firms that file for bankruptcy, South China Morning Post reported, citing liquidation experts. Johnson Kong Chi-how, the managing director of accounting firm BDO, said that if any assets of a bankrupt company are in China, the rights of Hong Kong liquidators would not be recognized, and the assets could not be taken over without approval from a court in China. “This would be a costly and lengthy court battle,” Kong said.