Path Dependence and Durability of Hong Kong's Existing Corporate Reorganization System

Charles Zhen Qu Dr, Griffith University

Abstract

A corporate reorganization system that ensures optimal deployment of distressed companies’ assets helps promote economic development. In many developed economies, faltering firms are reorganized through a formal corporate reorganization procedure. The Hong Kong government has recently recommended the enactment of such a procedure on the assumption that the existing corporate and insolvency framework is ill-equipped to restructure failing companies. This article rebuts this assumption through an assessment of the efficiency of the judicially-developed reorganization system that has emerged as a result of the failure to introduce a formal reorganization procedure a decade ago. It argues that since an efficient alternative reorganization system has been locked in for Hong Kong for more than a decade, a purposely-designed reorganization regime is no longer imperative for this region.