HONG KONG plans to introduce its version of U.S.-style “Chapter 11” bankruptcy provisions, a senior government official said.

Hong Kong does not have a formal corporate rescue framework, unlike most other major financial centers including fierce rival Singapore, after previous attempts to introduce one met with resistance from lawmakers and labor representatives who were worried plans did not offer enough protection for workers.

Such a system would give struggling companies a window to restructure their debt while being protected from the threat of legal action by their creditors.

James Lau, Hong Kong’s Secretary for Financial Services and the Treasury, intends to propose a bill setting out the new arrangements early in 2021, he said.

“So far, in soft sounding out, the opposition has not been that strong,” said Lau.

“With the employment picture worsening ... they can see that if things do not go well, just by insisting on their rights [they] are not getting anywhere.”

Hong Kong’s businesses are reeling from the combined effects of the U.S.-China trade war, several months of protests and now the economic impact of the fast-spreading COVID-19.

“We have recently had more inquiries from companies in difficulty and it is likely there will be an increase in the number of bankruptcies this year,” said Christopher So, a partner in PwC’s business recovery services team.

He added that the current options for embattled Hong Kong companies looking to restructure were limited.

The government hopes to introduce the bill in the next session of the Legislative Council, after elections in September, Lau said. (SD-Agencies)