![handle is hein.journals/ajal16 and id is 1 raw text is: Australian Journal of Asian Law, 2015, Vol 16 No 1, Article 1: 1-15
In Search of Debt Restructuring for Distressed Asian
Companies in England: A Case Study of Vietnam's
Vinashin
Zinian Zhang*
By studying the first English scheme of arrangement for an Asian company, this article examines how a distressed Vietnamese
company can resort to English law for debt restructuring and sheds light on the English court's intention of promoting
corporate rescue culture by sanctioning a ground-breaking stay in favour of a scheme of arrangement. The strength and limits
of an English scheme of arrangement for an international corporate rescue are also analysed. This milestone case shows the
United Kingdom's ambition to promote the city of London as a global debt restructuring centre by expanding its influence
beyond the European Union and towards Asia. It may also encourage Asian jurisdictions to update national laws to
accomm>lodatle challenges from ie gro >ofil gl>obl finanmes.
B;ankrupicy fIorum shopping. especially in large corporae reorganisation cases. has long been
debaled in the USA., where critics conlemn it as a national judicial embarrassment (Eisenberg anl
IL'ucki. 11)9: 971). while aIvocates applaudl it as promoling efficiency and juLicial competition
(lismussen and Thomas,. 2000: 1360). On the other side of the AtIlantic. a similar phenomenon
occurs within the IEuropean Union (E`:U). since many businesses prefer other IEU jurisdlitions IEU
rat her t han their domestic courts for bankruptcy solutions the IEurolpeam Council once made efforts
to curb bankruptcy forum-shopping within the IEU by requiring the 'centre of main interests'
(('O\II) as a preconlition fIor a national court to have jurisdiction over a bankruptcy case. This
means a company cannot use other IEU jurisdictions fIor bankruptcy including bankruptcy debt
rest ruct uring if' its centre of main int erests (that is. its major assets. or main business operations or
a combination) is not localed in the other member stiaes. Many large IEurolpean businesses
circumvent this restriction. however. by choosing the UIK as their flavourie lebt restrucluring
fIorum (cI('ormack. 2009: 180). This is mainly because by comIrison with nmy other IEuropean
member states legal systems the UIK insolvency regime. including the aIministrat ion and( company
voluntary arrangement ((CV'.A) procedure. is part icularly attractive andl user-friendly lfir businesses.
lue Io its 'lexibility (cI('ormack. 2009: 180).
In adldition to foirmal insolvency procedures. the UIK has another popular tool fIor debt
restrucluring,. a scheme of arrangement. This has lel many high-profile companies from
continental IEurope Io seek debt restrucluring in ILndon (cIc('ormack. 201 1.826).
IBy providing elfecive and efficient debt restrucluring services. the UK aims to strengthen the
strategic position of London as a prominent financial centre as well as a legal services centre. Its
ambition is not, however, confined within the EU (Payne, 2013: 565). The UK is increasingly
keeping an eye on Asia, where fast-growing economies like China and Vietnam can offer new
opportunities.
Recently, the UK High Court, for the first time, granted a scheme of arrangement for an Asian
company, Vietnam Shipbuilding Industry Group (popularly known as 'Vinashin') (Shah and
Cheong, 2013),' to restructure its US$ 600 million international loan facility as a significant part of
its debt restructuring project (Chakravarti, 2013b). This case is of significance for at least two
reasons. First, it may open a new page in cross-border insolvency, since this case confirms that
English schemes of arrangement can be internationally applicable, that is, even Asian companies
* Post-doctoral research fellow at the Centre for Cross-Border Commercial Law in Asia (CEBCLA),
School of Law, Singapore Management University. The author wishes to thank Professors Tang Hang
Wu and Roman Tomasic and two anonymous referees for their helpful comments. Any mistakes
remain the author's responsibility.
1 Vietnam Shipbuilding Industry Group, Re [2013] EWHC 2476 (Ch).](ViewImageLocal?handle=hein.journals/ajal16&div=1&collection=&method=preview&ext=.png&size=3)
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