Re Differ Group Auto Ltd
Read the full judgment text of HCCW 266/2023 on BabelCite. This High Court CFI judgment was delivered on 23 November 2023.
1. I have a summons before me dated 6 November 2023 issued by the Company seeking a validation order in the following terms:
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HCCW 266/2023 [2023] HKCFI 3144 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMPANIES WINDING-UP PROCEEDINGS NO 266 OF 2023 ________________
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_________________ D E C I S I O N _________________ 1.I have a summons before me dated 6 November 2023 issued by the Company seeking a validation order in the following terms:
2.The proceeds of the placement are intended, as it is apparent from the language of the summons, to be used partly to finance the continuation of the group of companies of which the Company is the apex. 3.The Petitioner expressed some concerns about the application, partly, as I understand it, because of reservations it has about the viability of a scheme of arrangement, the Company has introduced and which will first become before the court in January of next year. 4.As the new money to which the validation order relates is entirely the product of a placement of new shares, it seems to me that it is difficult to identify any material prejudice to the creditors. It seems to me that the right way to think about an application of this sought is to ask whether there is any reason to think that the creditors would be worse off than they would have been at the time that the Petition was presented, if the order granted. As the payments in respect to which the validation order are sought, are to be settled exclusively out of the new money raised by the post-petition placement, as part had the proposed restructuring, it seems to me that it is unlikely that the existing creditors could ever be prejudiced. The investor has not become a creditor of the Company by virtue of injecting the new money. 5.Mr Yan who appeared for the Petitioner suggested that as we do not know what if any conditions may have been imposed. It is possible that the investor has some right to unravel the placement in the event that the restructuring proves unsuccessful. It seems to me that this must be inherently unlikely as if the new money constitutes new capital of the Company, it could only be returned to the investor by reducing the Company’s capital, which I would have thought in practice, if the Company was in liquidation, would be impossible. 6.I will, therefore, grant the order sought and include a paragraph which requires the Company to provide documents evidencing the payments covered by the validation order to the Petitioner seven days prior to payment.
Mr Terrence Tai, instructed by Michael Li & Co, for the company Mr Yan Y Clark, instructed by Wong Poon Chan Law & Co, for the petitioner Ms Weiwei Du, of King & Wood Mallesons, for the supporting creditor (Choi, Simon Waihong) Li Jinji, supporting creditor, appeared in person Attendance of C L Chow & Macksion Chan, for the supporting creditor (Jiang Weiqi), was excused Attendance of ZM Lawyers, for the supporting creditors (Li Fuxing & Chen Yide & Zhu Shunyun), was excused Attendance of David Fenn & Co, for the supporting creditors (Feng Dejun & Yang Hong Yuan), was excused Attendance of Tony Kan & Co, for the supporting creditor (Zhang Yunhui & Zhao Lin), was excused Attendance of Tso Au Yim & Yeung, for the supporting creditor (Big-Max Manufacturing Co, Limited) Attendance of Stevenson Wong & Co, for the supporting creditor (Bi Zhongwei) Attendance of H M Tsang & Co, for the opposing creditor (Flourish Growth Fung), was excused Attendance of the Official Receiver was excused Chen Liguo, supporting creditor, was not represented and did not appear Bao Fang, supporting creditor, was not represented and did not appear |