Read the full judgment text of HCMP 1882/2019 on BabelCite. This Court of First Instance judgment was delivered on 5 December 2019 before Hon Harris J.
Companies Ordinance (Cap 622) – scheme of arrangement – s.673 – sanction – restructuring of unsecured debt securities – China Singyes Solar Technologies Holdings Limited – debtor a Bermuda-incorporated, Hong Kong-listed holding company with Mainland operations – group financial deterioration since June 2018 – Existing Debt Securities comprising RMB930,000,000 5% convertible bonds (English law), US$160,000,000 6.75% senior notes due 2018 and US$260,000,000 7.95% senior notes due 2019 (both New York law) – HSBC as trustee – settlement and dismissal of Deutsche Bank winding-up petition – scheme provides for cancellation of Existing Debt Securities in exchange for US$41,400,000 cash and new senior guaranteed notes due 2022 – legal principles for sanctioning schemes restated following Re Mongolian Mining Corp and Re Da Yu Financial Holdings Ltd – scheme for a permissible purpose – class composition – whether beneficial owners of global notes are proper scheme creditors – Re Swiber Holdings Ltd and Re Noble Group Ltd (No 1) – beneficial owners regarded as contingent creditors of issuer – trustee (HSBC) undertook not to vote to avoid double counting – scheme creditors properly voted as a single class as general unsecured creditors entitled to same consideration with no separate class disputes – release of third party rights – whether scheme may release claims against subsidiary guarantors – Re Lehman Brothers International Europe (Patten LJ) – release of contractual rights against related third parties permissible where ancillary to main arrangement – releases necessary to prevent creditors undermining scheme by recovering from subsidiaries – ex gratia payment of consent fee to non-RSA creditors did not fracture class, following Re Mongolian Mining – Explanatory Statement adequate – international effectiveness – parallel scheme in Bermuda – 100% support from English law convertible bond holders negating the Gibbs rule, following Re OJSC International Bank of Azerbaijan – no invariable requirement of Chapter 15 recognition for New York law-governed debts – more than 99% support for New York law notes – robust approach in Re Garuda and Re Lehman Brothers International (Europe) (No 10) – court should not act in vain – sufficient Hong Kong connection through listing, registration, management and listing of debt securities – risk of adverse US enforcement de minimis – scheme sanctioned.
Legal issues: Whether a scheme of arrangement may include release of third party guarantor claims · Whether beneficial owners of global notes are properly treated as a single class of contingent creditors · Whether ex gratia consent fee to non-RSA creditors fractures the class · Whether Chapter 15 recognition is required for New York law-governed notes · Whether the scheme has sufficient connection to Hong Kong and is internationally effective
Outcome: Scheme of arrangement sanctioned; form of order approved at the Petition hearing on 5 December 2019.
Cited by 20 cases · Cites 2 cases