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Offshore Litigation Blog

Newspaper rolled up as a megaphone

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Schemes of arrangement - a real (estate) restructuring tool for financially distressed BVI companies
A scheme of arrangement is a statutory tool available to BVI companies, which, if sanctioned by the Court, enables the implementation of a debt restructuring plan that has been approved by the prescribed percentage of creditors. As many Chinese real estate companies look to restructure, RongXingDa Development (BVI) Limited, a member of the RiseSun Real Estate Development Co. Ltd group, recently obtained sanction from the Court for a scheme of arrangement and avoided liquidation.
Cayman Islands Court lays down entry threshold for PL rescue process and raises comity with Hong Kong Court
In the recent decision of Silver Base Group Holdings in the Grand Court of the Cayman Islands, Justice Doyle has set out the factors to be considered when allowing a debtor company to enter into a PL rescue process, in circumstances where there is an existing winding up petition against the same debtor filed in Hong Kong. The case underscores the importance of comity and cooperation between the Cayman Islands and Hong Kong courts, as conduits for restructuring debt in the modern world.
Take 10: Season three, episode eight - International arbitration: A lesson in case management
In our eighth episode of this season’s Take 10 podcast, Partner Andrew Thorp is joined by Partner Peter Ferrer, Co-head of our global Litigation, Insolvency and Restructuring team and Counsel Olga Osadchaya, a member of our Litigation and Insolvency practice in the BVI.
New restructuring tool in the Cayman Islands
The Cayman Islands has introduced the Companies (Amendment) Bill 2021 to amend the Companies Act (2021 Revision) (the Act) which would allow for the restructuring of a company under the supervision of a restructuring officer and provide for a stay on creditors actions when a company is undergoing a restructuring.
Rule in Gibbs applied: Recognition of Singapore moratoria denied in Scotland
In the recent Scottish case of Chang Chin Fen v Cosco Shipping (Qidong) Offshore Ltd, the Outer House of the Court of Session refused petitions brought by debtor companies under the Cross-Border Insolvency Regulations, 2006 to, amongst other things, recognise moratoria obtained in the Singapore High Court on the basis that to do so would prejudice the rights of a creditor to claim under its English-law governed debt, which stood outside the proposed Singapore schemes.
Recognition of foreign “light touch” provisional liquidations affirmed once again by the Hong Kong Court
The recent judgment of Mr Justice Harris in In Re China Oil Gangran Energy Group Holdings Limited (In Provisional Liquidation) recognising the appointment of “light touch” provisional liquidators in the Cayman Islands, is the latest in the growing body of Hong Kong jurisprudence confirming the willingness of the Hong Kong Court to recognise the appointment of foreign provisional liquidators for restructuring purposes, despite the fact that Hong Kong has no legislation that provides for such a restructuring.
Position Paper on Parallel Schemes of Arrangement: the Harneys “Schemario Rules”
Harneys has decided to release its March 2020 Position Paper on Parallel Schemes of Arrangement: the Schemario Rules. Download the PDF here.
The Wrecking Ball vs the Crystal Ball – planning a parallel scheme of arrangement
In the recent case of In the Matter of China Oil Gangran Energy Group Holdings Limited, the Hong Kong High Court - in an obiter dicta judgment - has noted that parallel schemes of arrangement are unnecessary if there is no dissentient creditor action in another jurisdiction which might send a wrecking ball to the scheme.
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.
Restructuring culture needs to change – Hong Kong Court leads the way
In the recent case of In the Matter of China Bozza Development Holdings Limited, Mr Justice Harris of the Hong Kong High Court recognised a Cayman Islands light touch PL but refused to grant that PL assistance. This was because there was no viable restructuring proposal, and there appeared to be a breach of the well-established route to common law recognition and restructuring as developed in Z-Obee, in order to obtain a de facto moratorium of enforcement action by creditors in Hong Kong. The case echoes the recent “scanty in the extreme” restructuring proposal in Lamtex Holdings Limited where a similarly hopeless restructuring proposal led to the application for recognition being flatly refused. Further, the company appeared to have little regard to the interests of creditors in its proposals.
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