Re Re Hsin Chong Aster Building Services Ltd

HCMP 1069/2020

[2020] HKCFI 3108

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1069 OF 2020

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D E C I S I O N

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1.On 8 October 2020 I granted leave to the Company to convene a meeting of its creditors to consider and vote on a Scheme of Arrangement intended to compromise the Company’s unsecured debt. The Scheme is very straightforward, but arises in slightly unusual circumstances.

2.The Company is a subsidiary of Hsin Chong Group Holdings Limited which was a listed company and is now in liquidation.  The Company, as a result of guarantees given in respect of facilities and bonds entered into by its ultimate holding company is insolvent owing in excess of HK$4 billion.  This liability bears no resemblance to the size of its commercial activities, which is as a contractor carrying out government work. As a consequence of it being a government contractor it has, however, a license which permitted it to tender for government contracts.  That licence is of value.  A third party investor has been prepared to inject HK$37 million into the Company in order to acquire the licence.  This makes available HK$32 million to the scheme creditors, the unsecured creditors of the Company.

3.Although this produces a very small return to scheme creditors, as they do not otherwise expected to receive anything it has made sense for what, as I have said, is a straightforward scheme to be introduced. The principles [1] which govern the sanction of a Scheme of Arrangement are:

(1)  The Scheme is for a permissible purpose.

(2)  The scheme creditors had sufficiently similar legal rights, all being unsecured, non-preferential, non-trade creditors.

(3)  The scheme meeting was duly convened.

(4)  The creditors had been given sufficient information by way of the explanatory statement and the Scheme.

(5)  An intelligent and honest person acting in his interest may reasonably (indeed, may very reasonably) have voted for the Scheme.

4.These criteria are clearly satisfied in the present case and the necessary statutory majorities were obtained.  Votes in favour accounted for 79% in number and 87% in value of scheme creditors voting in person or in proxy at the scheme meeting.

5.I will, therefore, make an order sanctioning the scheme in the form of the draft presented to me at this hearing.

Mr Laurence Li SC, instructed by Kwok Yih & Chan, for the company