Towards an Effective Scheme-Based Corporate Rescue System for Hong Kong

Abstract

Scheme of Arrangement (SOA) was dismissed as a viable restructuring device in the corporate rescue debate towards the end of the last century. This paper demonstrates that SOA can be used effectively to perform corporate rescue functions. This conclusion is based on an assessment of the efficacy of the SOA-based rescue system developed by the Hong Kong courts since the mid-late1990s. The paper points out, however, that the effectiveness of this scheme-based restructuring system can be greatly improved by linking a court-controlled moratorium to the SOA provision in Hong Kong's Companies Ordinance.