Hong Kong Court Sanctions Guarantor’s Scheme using a Deed of Assumption to Discharge Principal Obligors’ Debts
This is the first time a Hong Kong Court has directly addressed the issue of whether a scheme discharging the guarantee obligations assumed by the scheme company can also discharge the primary obligation owed by another entity within the same corporate group as the scheme company. In particular, the court acknowledged the use of deeds of assumption in England (more commonly known as “deeds of contribution” under English law parlance) in a guarantor’s scheme to discharge debts owed by the principal obligors. However, the Hong Kong Court noted that the use of deeds of assumption was not necessary under Hong Kong law.
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