Creditors often face significant information asymmetry when debtor companies seek to
restructure their debts. In the United Kingdom, it is mandatory for debtor companies, seeking
to invoke the courts’ jurisdiction to restructure their debts via schemes of arrangement
(schemes), to disclose material information in the explanatory statement to enable the
creditors to make an informed decision as to how to exercise their votes in creditors’
meetings.
The English schemes have been transplanted into common law jurisdictions in Asia,
including Hong Kong and Singapore. However, due to the differences in the shareholding
structures and the kinds of debts that are sought to be restructured in the UK and Hong
Kong/Singapore, this transplantation gives rise to the question as to whether information
asymmetry is in fact adequately addressed in the scheme process. Drawing from the
experiences of Hong Kong and Singapore, we argue that there are three principal concerns in
the current disclosure regimes: how debtors disclose the liquidation analysis or alternative to
restructuring via schemes; how debtors disclose advisors’ fees; and the equality of provision
of information in the scheme process.

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