SECTION S - ASSESSMENT OF PROCESSES
S1. Is the process for taking of security over land to secure corporate borrowing:
Not expensive  
Expensive X
* Very expensive  
Easy X
Difficult  
* Very difficult  
Very efficient  
Efficient X
* Inefficient  
Quick X
Slow  
* Very slow  
S2. Is the process for taking of security over property other than land to secure corporate borrowing:
Not expensive  
Expensive X
* Very expensive  
Easy X
Difficult  
* Very difficult  
Very efficient  
Efficient X
* Inefficient  
Quick X
Slow  
* Very slow  

The norm here was a floating charge. The answers would be quite different, for example, if the security were airplanes

S3. Is the process for enforcement of security over land:
Not expensive  
Expensive X
* Very expensive  
Easy X
Difficult  
* Very difficult  
Very efficient  
Efficient X
* Inefficient  
Quick  
Slow X
* Very slow  

 

Some answers hedged, because of the different types of procedures.

 
S4. Is the process for enforcement of security over property other than land:
Not expensive X
Expensive  
* Very expensive  
Easy X
Difficult  
* Very difficult  
Very efficient  
Efficient X
* Inefficient  
Quick  
Slow X
* Very slow  

 

Answers were inconsistent, likely because it was not clear whether or not court intervention was being sought.

 
S5. Is the process for debt collection:
Not expensive  
Expensive X
* Very expensive  
Easy  
Difficult X
* Very difficult  
Very efficient  
Efficient X
* Inefficient  
Quick  
Slow X
* Very slow  

 

High legal costs.

 
S6. Is the process for winding up (liquidating) an insolvent corporate borrower:
Not expensive  
Expensive  
* Very expensive X
Easy  
Difficult X
* Very difficult  
Very efficient  
Efficient X
* Inefficient  
Quick  
Slow X
* Very slow  

 

High accountancy and legal costs.

 
S7. Is the process for the possible re-structuring of an insolvent corporate borrower:
Not expensive  
Expensive  
* Very expensive X
Easy  
Difficult X
* Very difficult  
Very efficient  
Efficient  
* Inefficient X
Quick  
Slow X
* Very slow  

 

There does not exist at present an effective mechanism for restructuring companies in Hong Kong, China. Section 166 is rarely used, The main option is an informal workout, which can prove cumbersome and expensive.

 
S8. What is the average time period between the filing of an application for the winding up (liquidation or bankruptcy) of an insolvent corporate borrower and the formal pronouncement that the corporate borrower will be liquidated:
1-2 Months X
2-4 Months  
4-6 Months  
* Other  

*Specify time period and give brief reasons

Interestingly, the answers ranged over the first three boxes, but the correct answer is that the average time at present is 6 weeks.
S9. What is the average time period for the commencement of a formal procedure for the re-organisation or re-structure (including a composition) of an insolvent corporate borrower and the commencement of the implementation of an agreed formal plan of re-organisation or re-structure:
2-4 Months  
4-6 Months  
8-12 Months  
* 12-18 Months X
* Other  

*Specify time period and give brief reasons

Very few cases.
S10. What is the average time period for the commencement of an informal procedure (a "work out") for the re-organisation or re-structure (including a composition) of an insolvent corporate borrower and the commencement of the implementation of an agreed plan of re-organisation or re-structure:
2-4 Months  
4-6 Months  
8-12 Months  
* 12-18 Months X
* Other X

*Specify time period and give brief reasons

One banker noted that by the time two years has passed most of the banks have lost interest - thus many workouts seem to get agreed upon from 18-24 months.
S11. If there are relevant statistics available for the incidence of formal insolvency procedures for insolvent corporate borrowers do these show that the incidence for (a) liquidation/bankruptcy and (b) re-organisation/re-structure is:
Very high  
High  
Low  
* Very low X
Very high  
High  
Low  
* Very low X

Interestingly, there was some range in the answers for (a), but it is quite clear from the data that the rate of liquidation in Hong Kong, China is quite low. The rate of reorganization is even less.
S12. What is your assessment of the predictability (positive, certain outcome) of the following processes in your economy:

(a) Security enforcement of land
Very high X
High  
Medium  
Low  
* Very low  
 

(b) Security enforcement of property other than land

Very high  
High X
Medium X
Low  
* Very low  
 

(c) Judicial handling of security enforcement

Very high X
High  
Medium  
Low  
* Very low  
 

(d) Judicial handling of debt collection
Very high  
High X
Medium  
Low  
* Very low  
 

(e) Judicial handling of insolvency (liquidation) cases
Very high  
High X
Medium  
Low  
* Very low  
 

(f) Judicial handling of cases of re-organisation/re-structure
Very high  
High X
Medium  
Low  
* Very low