MACAU SAR, CHINA Law and Practice Contributed by: Calvin Tinlop Chui and Carla Veiga, Lektou
proceeds are used to cover debts of the insolven - cy estate, primarily liquidation expenses, with any remaining funds then allocated to creditors according to the amounts and priority established in the court- approved list of recognised creditors. Given that the proceeds are typically insufficient to fully cover all rec - ognised debts, creditors receive payment on a pro rata basis within each class. Interim payments become available once a final deci - sion on the ranking and value of credits has been reached and are, in certain circumstances, currently mandatory. 5.4 The Position of Shareholders and Creditors in Liquidation Pre-insolvency attachments and enforcement meas - ures are generally stayed upon the opening of pro - ceedings, subject to statutory preferences and exceptions. Retention of title is recognised under substantive law and respected in insolvency to the extent validly constituted and enforceable, with practi - cal enforcement co-ordinated through the administra - tor and court. Set-off rights existing prior to opening may be exercised where the legal requirements are met, while post-opening set-off is restricted to prevent unfair preference and preserve pari passu treatment. Secured creditors retain their rights in rem over collat - eral. Security interests survive insolvency, but enforce - ment is co-ordinated within the collective process and may be subject to the stay and court oversight to avoid dismemberment of the estate and to maximise realisa - tion. Secured creditors are paid from collateral pro - ceeds according to rank after costs and prior charges. Unsecured creditors share pro rata after satisfaction of preferential and secured claims, and shareholders rank last, typically receiving value only if a restructur - ing preserves equity on agreed terms. Creditors influence but cannot arbitrarily block the process. They may vote on a concordata or credi - tors’ agreement, object to proposals, contest claim admissions, and challenge confirmation on statu - tory grounds. A supermajority by value is required to approve restructuring proposals; without reaching that threshold and obtaining court approval, a plan cannot bind dissenters. There is no cross-class cram-down
mechanism allowing one consenting class to impose terms on a non-consenting class outside the statutory voting thresholds. Dissenting unsecured creditors can be bound if the supermajority threshold is met and the court confirms the concordata, but secured creditors are not compelled to surrender or subordinate their security without consent, payment, or legally recog - nised adequate protection. Third-party or non-debtor releases are not ordinarily permitted in a statutory plan in the absence of express consent of the affected creditors. Guarantees and co- obligor liabilities generally survive the debtor’s restruc - turing unless creditors agree otherwise, and extend - ing plan effects to non-debtors is atypical and closely scrutinised. The opening of proceedings triggers an automatic or court-ordered suspension of individual enforce - ment actions against the debtor and estate property, ensuring collective treatment. The stay is not abso - lute: actions where the debtor is plaintiff, proceedings concerning personal status and capacity, and mat - ters involving additional defendants may continue. Secured creditors’ enforcement is co-ordinated with the insolvency court and administrator and may be temporarily deferred to maximise estate value, but underlying liens and priorities remain intact. New money extended during proceedings may be secured under general law but does not obtain automatic super-priority over existing secured claims. Overall, the regime preserves creditor rights within a court-controlled collective process that emphasises orderly administration, equality among similarly situat - ed creditors, and the possibility of consensual restruc - turing by supermajority vote with court approval, with - out cross-class cram-down or non-debtor releases. 6. Cross-Border Issues in Insolvency 6.1 Sources of International Insolvency Law As per the information available, there are no interna - tional rules, standards, guidelines or best practices applicable in Macau for the restructuring and insol - vency regime.
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