Re China Changbaishan International Holdings Ltd

On 21 July 2026, Linda Chan J in the Court of First Instance handed down judgment in HCMP 108/2026, Re China Changbaishan International Holdings Ltd [2026] HKCFI 5285, sanctioning the scheme of arrangement between the Bermuda-incorporated, SEHK-listed company (stock code 989) and its 27 Scheme Creditors with total claims of HK$711.37 million. Mr Michael Lok (with Ms Jasmine Cheung and Mr Matthew Suen) of CLKW Lawyers LLP acted for the Company.

The Company is an investment holding group with subsidiaries in Hong Kong, BVI, Samoa and Mainland China, principally engaged in real property investment, with diversified ginseng and mineral water operations. Since 2022 the Group has suffered operating losses, increased gearing and refinancing difficulties, leaving it both cash-flow and balance-sheet insolvent (§4). The Scheme forms part of a three-part Restructuring: a HK$39 million Subscription by Ground Group HK (a Concert Party entity beneficially owned by directors Mr Cui and Mr Cong), the Scheme itself converting approximately HK$711 million of claims into 4,742,453,691 Scheme Shares, and a mandatory general Share Offer by Ground Group HK (§§7-19).

Holdings

The Court held that:

(1) The Scheme Effective Date (when the scheme binds creditors under s.673(5)-(6) of the Companies Ordinance) and the Restructuring Effective Date (when restructuring conditions are satisfied and Scheme Shares distributed) must be separately defined. The original draft conflated the two, leaving creditors bound but unpaid for an indefinite period. Linda Chan J rejected the position in Re China Beidahuang and required the Company to split the conditions (§§38-49).

(2) The post-vote amendments could be made without a further Scheme Meeting, falling within the modification clause and the principles in Re Powerlong Real Estate Holdings Ltd. They had no material adverse effect on Scheme Creditors' rights, and bringing the long-stop date earlier (from 31 December to 31 October 2026) was creditor-favourable (§§50-56).

(3) Concerns about post-Restructuring Group solvency, given that the Scheme released only the Company's guarantee liability and not the underlying subsidiary debts, were addressed through undertakings from Ground Group HK and other major creditors not to pursue subsidiaries, coupled with advice that under both Hong Kong and PRC law no indemnity rights arise against the guarantor absent express agreement (§§57-59).

(4) Abstention by a creditor at the Scheme Meeting is not a vote against. The 1928 English amendment adding "and voting" to the "present and voting" requirement established that an abstainer is "present" but not "voting". 22 of 23 present creditors (100% by number and value) approved the Scheme (§§73-82).

What it means for practitioners

Drafting counsel should distinguish Scheme Effective Date from Restructuring Effective Date from the outset, avoid the conflation flagged in China Beidahuang, fix the long-stop date at the convening stage, and secure irrevocable creditor undertakings on guarantees before asking the court to find the Group solvent post-Restructuring.