Read the full judgment text of HCCW 000756/1998 on BabelCite. This High Court CFI judgment was delivered on 28 April 1999 before Le Pichon J.
Companies law – winding-up petition – scheme of arrangement – Companies Ordinance (Cap 32) s.166 – court's discretion – HSBC petitioned to wind up UDL Holdings Limited based on approximately HK$102 million in guaranteed debts owed by subsidiary – Company proposed scheme of arrangement as alternative to liquidation – approximately 78% of creditors by value gave in-principle support – whether lengthy adjournments appropriate – whether creditors' consent vitiated by misleading information – whether Ernst & Young letters misleading – whether to exercise discretion to make winding-up order – Held (lengthy adjournments): no inflexible four-week rule under Re Esquire (Electronics) Ltd; adjournments may be granted where there is substantial creditor support and reasonable prospects of acceptance – Held (misleading information): letter of 5 January 1999 not misleading; Ernst & Young's role as restructuring adviser clearly disclosed; conditional nature of October support did not vitiate consent as financial creditors guided by Ernst & Young's analysis showing liquidation recovery would be practically nothing – Held (discretion): petitioner's right is a class right but majority must show good reason to override under Re Crigglestone Coal; Re P. & J. Macrae; K & R Wong Construction – substantial in-principle support and valid commercial reasons justified declining winding-up order – costs to follow the event in favour of the Company and opposing creditors
Legal issues: Whether lengthy adjournments are appropriate when a substantial majority of creditors support a restructuring · Whether creditors' consent to the restructuring was vitiated by misleading information · Whether the court should exercise its discretion to make a winding-up order
Outcome: Winding-up order not made; petition stood over to allow the proposed scheme of arrangement to proceed
Cited by 1 case