Incentivising Early-Stage Debt Restructuring for Large Firms : A Study of Hong Kong and some United Kingdom Comparisons

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)153-196
Number of pages44
Journal / PublicationJournal of Corporate Law Studies
Issue number1
Online published6 Jul 2023
Publication statusPublished - 2023


Financially distressed companies are more likely to be rescued as going concerns if they enter into debt restructuring early whilst still high up on the ‘demise curve’. In Hong Kong, early-stage non-consensual debt restructuring is effected via the scheme of arrangement. Yet, despite the similarities in the legislative framework, Hong Kong is less successful than the United Kingdom (UK) in using the scheme for early going-concern restructuring as the directors often invoke the scheme only when their company is far down the demise curve. We address the reasons for the difference based on the comparative outcomes of the schemes and interviews with insolvency professionals. Our results show that the reasons are attributed less to the differences in directors’ duties in the zone of insolvency but the perception on how these duties are enforced. Urgent law reform is thus required to incentivise directors to address the problems early. © 2023 Informa UK Limited, trading as Taylor & Francis Group.

Research Area(s)

  • Insolvency and restructuring law, corporate demise curve, schemes of arrangement, directors’ duties, the United Kingdom, Hong Kong