In a historic policy shift and a bid to boost business confidence in the country’s legal system, Chinese courts have struck a deal with Hong Kong allowing foreign investors the opportunity to recoup losses from bankrupt Chinese groups, reported the Financial Times.
The deal means that investors could be given power to liquidate assets on the mainland to recover their money. Courts in Shanghai, Shenzhen and Xiamen will be obligated to recognize insolvency orders filed by company creditors in Hong Kong. More cities could be added to the scheme in future.
“This is potentially a game-changing step,” said Patrick Cowley, head of restructuring services in Asia at KPMG.