Distressed Debt In Hong Kong: An Insolvency Primer For Private Equity

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Distressed Debt In Hong Kong: An Insolvency Primer For Private Equity

Recent shocks to the financial markets as well as

deteriorating economic conditions have brought insolvency issues

sharply back into focus. For some hedge funds and private equity

funds, insolvency has come unwelcome in the form of the

deteriorating financial condition of a portfolio company to whom

loans have been made or whose debt the funds have acquired. In this

article, we review basic Hong Kong insolvency law concepts and

outline debt recovery options.

A private equity fund or hedge fund facing the possible or

actual insolvency of a debtor portfolio company will generally wish

to assess its legal rights under its financing agreements with the

debtor company. In this regard, the fund will normally wish to

determine (i) whether it is obliged to make any further...

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