A visitor from afar

Author: | Published: 1 Nov 2009

As one of the world's three main financial centres and the springboard to mainland China, Hong Kong is exposed to many of the trends, ideas and innovative market practices adopted around the world. The latest practice to hit the shores of Hong Kong is the pre-packaged sale of insolvent businesses, commonly referred to as pre-packs.

While there are conflicting claims as to the exact origins of pre-packs, it seems that their formative years were spent in the hectic world of United States bankruptcies. However, it was in the United Kingdom that pre-packs really developed a new level of market prominence. The out of court administration procedure introduced into the United Kingdom by the Enterprise Act 2002 (UK) increased their popularity further, as it meant pre-pack sales could be implemented without first obtaining any court or creditor approval.

Despite Hong Kong being a common law jurisdiction with its insolvency laws based...