Judicial comments cast doubt on the ability to compromise US law-governed debt effectively based on Chapter 15 recognition alone.

A recent first instance decision in Hong Kong has relied upon the so-called rule in Gibbs to cast doubt on the ability of an offshore scheme of arrangement to compromise debt governed by a foreign law. In Re Rare Earth,1 a case that on its facts did not seem to require consideration of the issue, Mr Justice Harris voluntarily joined the fray. In so doing, he highlighted an important conflict of laws issue that will inform debtor groups with a Hong Kong presence on where to promote a restructuring.