Offshore Litigation

Blog

Offshore Litigation

Contributors

Jonathan Addo
Jonathan Addo
  • Jonathan Addo

  • Partner
  • British Virgin Islands
Jeremy Child
Jeremy Child
  • Jeremy Child

  • Partner
  • London
Julie Engwirda
Julie Engwirda
  • Julie Engwirda

  • Partner
  • Hong Kong
Peter Ferrer
Peter Ferrer
  • Peter Ferrer

  • Partner
  • British Virgin Islands
Claire Goldstein
Claire Goldstein
  • Claire Goldstein

  • Partner
  • British Virgin Islands
Hazel-Ann Hannaway
Hazel-Ann Hannaway
  • Hazel-Ann Hannaway

  • Partner
  • British Virgin Islands
Nick Hoffman
Nick Hoffman
  • Nick Hoffman

  • Partner
  • Cayman Islands
Andrew Johnstone
Andrew Johnstone
  • Andrew Johnstone

  • Partner
  • Hong Kong
Paula Kay
Paula Kay
  • Paula Kay

  • Partner
  • Hong Kong
Phillip Kite
Phillip Kite
  • Phillip Kite

  • Partner
  • British Virgin Islands
Vicky Lord
Vicky Lord
  • Vicky Lord

  • Partner
  • Shanghai
Paul Madden
Paul Madden
  • Paul Madden

  • Partner
  • Cayman Islands
Henry Mander
Henry Mander
  • Henry Mander

  • Partner
  • Cayman Islands
Ian Mann
Ian Mann
  • Ian Mann

  • Partner
  • Hong Kong
William Peake
William Peake
  • William Peake

  • Partner
  • London
Lorinda Peasland
Lorinda Peasland
  • Lorinda Peasland

  • Consultant
  • Hong Kong
Chai Ridgers
Chai Ridgers
  • Chai Ridgers

  • Partner
  • Hong Kong
Nicola Roberts
Nicola Roberts
  • Nicola Roberts

  • Partner
  • Hong Kong
  • Singapore
Paul Smith
Paul Smith
  • Paul Smith

  • Partner
  • Cayman Islands
Andrew Thorp
Andrew Thorp
  • Andrew Thorp

  • Partner
  • British Virgin Islands
Jessica Williams
Jessica Williams
  • Jessica Williams

  • Partner
  • Cayman Islands
Jayson Wood
Jayson Wood
  • Jayson Wood

  • Partner
  • Cayman Islands

Preserving creditor value in schemes of arrangement

In the recent decision of In the Matter of Grand Peace Group Holdings Limited, the Hong Kong Court noted obiter dicta that practitioners should, citing Re Da Yu Financial Holdings Limited, be cognisant that parallel schemes of arrangement in both the company’s place of incorporation and Hong Kong, where the offshore company is listed in Hong Kong, would seem generally to be unnecessary. Parallel schemes could result in an escalation in legal fees which is not in the interests of unsecured creditors.

These obiter dicta comments are entirely correct as to the necessity of a parallel scheme where there is no or marginal risk of dissentient creditor action. Unnecessary duplicative proceedings are to be avoided in favour of pragmatism as to assessing the risk of creditor support. This assessment changes over time as support is garnered by the restructuring professionals. Mr Justice Jonathan Harris noted that: “In future, I will need to be satisfied by any company or provisional liquidators who propose that parallel schemes are introduced that it is in the genuine best interests of unsecured creditors, that a scheme is introduced in the Company’s place of incorporation”. This is the correct starting point. It was further noted that by reason of the rule in Gibbs, any Hong Kong law debt compromised through a Hong Kong Court scheme of arrangement would be recognised by a common law Court.

The decision is a timely reminder of the need for the restructuring culture to change to maximize returns for stakeholders echoing analogous comments in the Cayman Islands decision of China Resources and the Hong Kong decision of China Bozza.

 

Preserving creditor value in schemes of arrangement

Leave A Comment