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Why Hong Kong should put debt restructuring back on the legislative agenda

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Why Hong Kong should put debt restructuring back on the legislative agenda

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In January, journalists, corporate consultants and restructuring specialists filled up a Hong Kong courtroom in a rare scene to attend Evergrande’s winding-up hearing where judge Linda Chan declared “enough is enough” and handed down a liquidation order.

The landmark case involving China’s once-biggest property developer by sales with more than $300bn in liabilities has put the territory’s legal framework for resolving debt problems back in the spotlight. More than 20 Chinese developers have been slapped with winding-up petitions in Hong Kong since China’s real estate crisis began in 2021, with at least five being ordered to be wound up by a Hong Kong judge.

This is not a great result for any of the parties involved. Often described as a “nuclear option” and a lose-lose scenario by lawyers, these winding-up court proceedings leave creditors with little to no return. And proceedings can drag out for many months.

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Lawyers and restructuring specialists say Hong Kong’s legal framework for other debt restructuring options is lacking compared with financial jurisdictions such as London, New York and Singapore.

A restructuring bill to remedy this has been in discussion for more than 20 years in the Asian financial hub but other legislative priorities have taken precedence amid a lack of consensus on what it should contain. The last push to introduce one came in 2020 when a draft legislative proposal was made as the Covid-19 pandemic struck.

The Hong Kong government carried out a consultation but later put the plan again on hold. Although it said it would continue to consult stakeholders to refine the legislative proposals, there does not appear to be a timeframe for that.

Lawyers said there was a pressing need to raise the proposal back up the agenda, particularly as offshore creditors increasingly use Hong Kong courts to force distressed Chinese developers into speeding up their restructuring plans.

Chinese developers have defaulted on a massive $115bn of $175bn in outstanding offshore dollar bonds since 2021, according to Bloomberg data. And property developer Shimao last month became one of the latest to face a winding-up petition, unusually from a Chinese state-backed bank. Country Garden, which defaulted in October, received a winding-up petition in February involving more than $200mn worth of debt.

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A key element of a restructuring bill is that after the appointment of a supervisor for a debt restructuring, a statutory moratorium would be imposed to halt parties from rushing off to court and asking for a winding up.

Under the current legal system in Hong Kong, creditors are free to go after distressed companies by filing wind-up petitions before a scheme of arrangement for a restructuring is agreed and then approved by a court, according to Jamie Stranger, a Hong Kong-based partner at Stephenson Harwood.

Law firm Herbert Smith Freehills says this gives “dissenting creditors significant leverage to hold the company and other consenting creditors to ransom and otherwise encourages ‘rogue’ behaviour by them, which in turn jeopardises the restructuring efforts”. It adds: “This often leads to a worse outcome for all interested parties where there is a genuine prospect that the restructured business would be able to trade out of its difficulties.”

One problem is to what extent would a restructuring bill cover mainland Chinese assets. Under the existing winding-up process in Hong Kong, it is very unlikely for offshore creditors to get back any onshore mainland assets. This is despite a “mutual recognition agreement” on insolvency and restructuring rolled out in 2021 that applies in some parts of mainland China. Offshore creditors remain typically subordinated to onshore stakeholders, lawyers say.

A bill “would need to interface with the mainland laws and provide some ability for a provisional supervisor to be recognised and assisted in the mainland”, Jonathan Leitch, a Hong Kong-based partner at Hogan Lovells, told me. Otherwise, the roles of a Hong Kong-based provisional supervisor in most cases “would be severely hampered”.

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Lance Jiang, a partner in restructuring and insolvency at law firm Ashurst, says: “Most practitioners would like to have the new restructuring bill, because it definitely mitigates the gap between Hong Kong and other international centres and would give the companies and also the creditors side with more options to do consensual restructuring.”

“It’s Hong Kong, you know, the legislative council can do it quickly, efficiently,” says Jiang, adding that this would benefit everyone in the market.

thomas.chan@ft.com

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Four people on NASA’S Crew-12 arrive at the International Space Station

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Four people on NASA’S Crew-12 arrive at the International Space Station

In this image from video provided by NASA, a SpaceX Dragon capsule carrying Americans Meir and Jack Hathaway, France’s Sophie Adenot and Russia’s Andrei Fedyaev, approaches the International Space Station for docking on Saturday, Feb. 14, 2026.

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The four members of NASA’S SpaceX Crew-12 mission docked at the International Space Station on Saturday afternoon.

The crew blasted off before dawn on Friday morning from Cape Canaveral in Florida.

The Crew-12 mission includes two NASA astronauts, Jessica Meir and Jack Hathaway, French astronaut Sophie Adenot, and Russian cosmonaut Andrey Fedyaev. During their eight-month mission, the crew will conduct scientific research to prepare for human exploration beyond earth’s orbit and enhance food production in space.

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“With Crew-12 safely on orbit, America and our international partners once again demonstrated the professionalism, preparation, and teamwork required for human spaceflight,” NASA Administrator Jared Isaacman said in a statement.

The mission replaces the crew from NASA’s Crew-11 mission, which departed the ISS a month ahead of schedule in January due to a medical evacuation of one of the crew members. Since then, the space station has been operating with a reduced staff of three people — well below it’s typical seven-person staff.

Isaacman also said that NASA is simultaneously making preparations for the 10-day Artemis II mission, which would send a crew of four astronauts around the moon. It’s the first crewed mission to the moon since Apollo 17 in 1972 and is slated to take off as soon as March.

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Video: Vermont Made Child Care Affordable. Could It Lead by Example?

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Video: Vermont Made Child Care Affordable. Could It Lead by Example?

Vermont had a problem. Child care was too expensive. “We would be paying $3,500 a month, more than twice our mortgage.” Some parents were giving up their careers to stay home — “After daycare, you come home with maybe $60 extra a week. It’s just not even worth it at that point.” making it harder for local businesses to hire workers. Some businesses wanted the state to pay for childcare, but they faced a big obstacle. “The word tax. It’s a very volatile word.” Ultimately, Vermont did manage to make child care more affordable. So we’re here to find out how they’re doing it. This year’s midterm elections could turn on the issue of affordability. “Affordability.” “Affordability.” “Affordability.” “The affordability crisis.” Forty-four percent of voters said having a family was unaffordable in a recent Times-Siena poll. Alison Byrnes and her husband, for example, wanted a third kid. “It felt just like our family wasn’t complete.” But daycare for two kids here costs $3,500 a month, and Alison’s mom was already dipping into her retirement fund to help pay for that. “There’s no way we could make that work.” For years, Vermont’s working-age population has been shrinking, making businesses like Smugglers’ Notch Resort compete to find the workers they need. In 2022, the resort was short more than a dozen housekeepers. The managing director was fed up with the staffing shortage and decided to try something new. He offered free child care for employees. “We announced the new program on a Friday and by Tuesday, we were full. All the jobs had been taken, so we knew we were really on to something.” The child care benefit attracted employees like Becca Bishop, who wanted to rejoin the workforce after a few years as a stay-at-home mom. “I chose to start working here purely because of the child care that we have.” Now before work, she drops off her 3-year-old, Archer, at the on-site daycare and her 5-year-old son, Hunter, at ski camp, which is also free. Then she works full time managing the resort’s arcade. Once Bill solved his staffing problem, he started talking to other Vermont C.E.O.s about the benefits of child care and lobbying for a new tax that would fund it statewide. “When I was first back in Vermont working for the governor, I was talking to all kinds of Vermonters, and what I found was everything that they cared about actually linked back to child care. Aly Richards spent a decade expanding child care in Vermont. She said business leaders like Bill were a crucial part of the push. “Once we had them in here saying, ‘Look, if I paid in to fix child care in a systemic, sustainable way through, let’s say, a payroll tax,’ what happened was it gave permission to lawmakers to move forward on this issue. Often, businesses come into this building and say, ‘Please, do not raise taxes.’ In this case, it really was flipped on its head. They became the most powerful voices in advocating for public investment.” “What we should really do is try it and find out what happens.” The child care bill, Act 76, passed in 2023. It established a new 0.44 percent payroll tax on employers and generates about $125 million a year to fund child care subsidies. Families pay on a sliding scale. So a family of four with a modest income pays no tuition for child care. Higher-income families pay a co-pay that’s supposed to stay below roughly 10 percent of their income. The law has only fully been in place for a year, but already the new funding has led to more than 1,200 new child care slots for kids across Vermont. For years, child care centers were closing because they couldn’t cover their bills. Now, new ones are opening, like this one in the farming town of Addison. Michelle Bishop had dreamed of starting a place like this, but couldn’t afford to open until she could count on the state to pay more than $400 per child each week. “We have 16 children enrolled — 80 percent of them are receiving subsidy.” The additional funding also meant she could actually afford to pay her workers a livable wage. Statewide, Vermont still needs many more child care centers before it can fully meet demand. For now, though, the difference the new law has made for these Vermont residents is clear. Alison and her husband were finally able to have the third child they wanted because they knew their childcare costs would be about $30,000 a year less than it would have been without the new law. “We can’t imagine our family without that third kiddo. It’s literally life-changing. Like — she would not be here.” For Rebecca, free child care means she can afford to save for a new house that fits her family better. “We do plan on staying in Vermont, yes.” Michelle plans to expand into another room for toddlers this spring. “We hope to open in March or April. We’re almost finished.” And as for Bill, he says the New tax is nothing compared to what Vermont gets for it. “We didn’t put in a new tax and find that we couldn’t pay our bills. We’re still here.” “In Vermont, we really came together and it’s working.”

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Investigators search second home in Nancy Guthrie kidnapping case

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Investigators search second home in Nancy Guthrie kidnapping case

Authorities served a search warrant at a home in Tucson on Friday night in connection with the disappearance of Nancy Guthrie, who investigators say was kidnapped from her nearby home 13 days ago.

A SWAT team converged on a house about two miles from Guthrie’s Arizona residence and removed two people from inside, law enforcement sources told The Times.

A man and a woman complied with orders to exit the home, News Nation reported. It is unclear what role, if any, the people may have played in Guthrie’s disappearance, which has flummoxed investigators for almost two weeks.

A Pima County Sheriff’s Department spokesperson confirmed late Friday that there was “law enforcement activity underway” at a home near E Orange Grove Road and N. First Avenue related to the Guthrie case, but declined to share additional information.

The FBI did not immediately respond to a request for comment.

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Around midnight, federal agents and sheriff investigators focused their attention on a silver Range Rover SUV parked outside a restaurant about two miles away from the home that was being searched. After taking photographs of the vehicle, agents opened the trunk of the SUV using a tarp to block onlookers view inside the vehicle, video shows.

It is not clear what, if anything, was found.

Investigators got their first major break in the case Tuesday with the release of footage showing an armed man wearing a balaclava, gloves and a backpack approaching the front door of Guthrie’s home and tampering with a Nest camera at 1:47 a.m. the night she was abducted.

“Today” host Savannah Guthrie with her mother, Nancy, in 2023.

(Nathan Congleton / NBC via Getty Images)

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Later Tuesday, authorities detained a man at a traffic stop in Rio Rico, a semirural community about 12 miles north of the U.S.-Mexico border, in connection with the investigation. Deputies and FBI forensics experts and agents searched his family’s home overnight but did not locate Guthrie. The man was released hours later and has denied any involvement in her disappearance. The Times is not naming him because he has not been arrested or accused of a crime.

Nancy Guthrie, the 84-year-old mother of “Today” host Savannah Guthrie, was discovered missing Feb. 1 after she didn’t show up to a friend’s house to watch a church service. She was taken from her home without her heart medication, and it’s unclear how long she can survive without it.

A day after Guthrie disappeared, news outlets received identical ransom notes that investigators treated as legitimate. Days later, a note was sent directly to the Guthrie family, allegedly from a man living in Hawthorne, that authorities say was an impostor.

Another ransom note was sent to a television station in Arizona last week.

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Sources told The Times that authorities have no proof the person who authored the ransom notes has Guthrie. But they also said the Feb. 2 note felt credible because it included details about a specific damaged piece of property and the placement of an accessory in the home that had not been made public.

On Friday, TMZ said it received a letter from someone claiming to know the identity of the person who abducted Guthrie and demanding the $100,000 FBI reward in bitcoin. The person wrote they don’t trust the FBI, which is why they’re sending the communication through TMZ, the website’s founder, Harvey Levin, told CNN.

“The manhunt of the main individual that can give you all the answers be prepared to go international,” the letter reads, according to Levin.

Authorities have released limited details about other evidence in the case.

A woman walks her dog past a Pima county sheriff's vehicle parked in front of Nancy Guthrie's home

A woman walks her dog past a Pima county sheriff’s vehicle parked in front of Nancy Guthrie’s home on Tuesday, Feb. 10, 2026 in Tucson, Ariz.

(Ty ONeil / Associated Press)

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However, the Pima County Sheriff’s Department said Friday that investigators located several gloves, including some found about two miles from Guthrie’s home, that are being tested.

Authorities also found DNA evidence that does not belong to Guthrie or members of her family at her home. Investigators are working to identify whom the DNA belongs to, according to the sheriff’s department.

Staff writer Hannah Fry contributed to this report

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