Insights and Analysis

Well kept but timed out? Recent Hong Kong court decisions show timing is everything in enforcement of bondholder rights

12 September 2023

Two recent Hong Kong decisions by the Hong Kong court have brought mixed messages for holders of offshore Chinese bonds structured through keepwell arrangements. On the one hand, the decisions concerning Peking University Founder Group Limited (PUFG) and Tsinghua Unigroup may give confidence that bondholder rights are, in principle, enforceable in Hong Kong. On the other, the Hong Kong court has laid down a strict test as to the window of time during which bondholders can hold issuers accountable and have their claims recognised by the courts in the mainland.

Both Tsinghua and PUFG had been undergoing restructuring of their onshore and offshore debts in the PRC mainland. Administrators there had either rejected the claims or not responded to the proofs of debt lodged on behalf of holders who had the benefit of a keepwell agreement.