Abstract
Subordinated debt is commonly used in the business world for both regulatory reasons and quasi-financing. Nonetheless, the nature of an unsecured subordinated debt arrangement is technically inconsistent with the insolvency law pari passu principle. This is the first article to review 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.
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