Winding Up Petition Arbitration Agreement

IBC has set up a mechanism in which creditors have the option to initiate a collection mechanism (known as the corporate insolvency resolution process) that involves either the revival of the debtor company (where the company can pay its debts) or the restructuring or liquidation. The risk of giving absolute priority to arbitration agreements is obviously that insolvent companies and individuals who are parties to an arbitration agreement will be able to avoid a liquidation or bankruptcy order by simply not allowing the debt (even if there is no credible defense or counterclaim) while other debts arise. it affects creditors as a whole. When this issue is considered by the courts of appeal in Hong Kong and Singapore – probably in Singapore in a short period of time – judges will be asked to weigh public policy in favour of arbitration against other important public policies. The impact of an arbitration clause on the court`s discretion to issue a liquidation decision was recently reviewed by the Hong Kong Court of First Instance. In addition, the Court clarified that there would remain exceptional circumstances in which a creditor could invoke liquidation proceedings before arbitration, for example when. B assets have been lost and provisional liquidators need to be appointed urgently to investigate the matter.

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