Unsecured Debt Subordination Arrangement Validity and the Legislative Reform in Hong Kong

Subordinated debt is commonly used in the business world for both regulatory reason and quasi financing. Nonetheless, the nature an unsecured subordinated debt arrangement technically, is inconsistent with the insolvent law pari passu principle. This is the first piece of article which reviews the law of subordinated debt in Hong Kong and submits that the local laws may have indirectly or impliedly validated an unsecured subordinated debt arrangement despite such inconsistency. This article will then evaluate these implied validations critically and explore why a statutory back up is still necessary in Hong Kong