RE CHINA OCEAN INDUSTRY GROUP LTD (“the Company”)

RE CHINA OCEAN INDUSTRY GROUP LTD (“the Company”)

Because the issued shares were fully paid and thus their transfer was not objectionable, and because the proposed capital reduction and issue of convertible bonds would generate substantial net proceeds (HK$109,000,000) to reduce indebtedness and benefit creditors, with no opposition and no prejudice shown to creditors, the court was satisfied to grant the validation orders.

Citation
[2019] HKCFI 2363
Parties
Company/applicant: China Ocean Industry Group Limited; Petitioner: Petitioner; Supporting Creditor: Forward Fund SPC-Double Management Fund SP; Supporting Creditor: Better Shine Limited; Creditor: Pacific Ocean Marine Limited; Official Receiver: Official Receiver
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 September 2019
Case Number
HCCW230/2019
Procedural Posture
Companies (winding Up) Proceedings / Application for Validation Orders (in Chambers)
Outcome
Validation orders granted in terms of the summons; no order as to costs.
Legal Topics
Validation Order, Share Transfer, Capital Reduction, Share Consolidation, Convertible Bonds, Restructuring, Winding Up Petition
Source Language
EN
Company Law Insolvency Law Securities/listing Law Validation Order Share Transfer Capital Reduction Share Consolidation Convertible Bonds +2 more

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Parties

China Ocean Industry Group Limited

Company/applicant

Petitioner

Petitioner

Forward Fund SPC-Double Management Fund SP

Supporting Creditor

Better Shine Limited

Supporting Creditor

Pacific Ocean Marine Limited

Creditor

Official Receiver

Official Receiver

Procedural Posture

Companies (winding Up) Proceedings / Application for Validation Orders (in Chambers)

Legal Issues

  1. 1 Whether transfers of issued fully paid shares since presentation of winding-up petition should be validated
  2. 2 Whether a capital reduction, share consolidation and issue of convertible bonds (fundraising) for an insolvent company should be validated
  3. 3 Whether the proposed transactions are for the benefit of creditors and likely to generate net income given the company's insolvency

Ratio Decidendi

Because the issued shares were fully paid and thus their transfer was not objectionable, and because the proposed capital reduction and issue of convertible bonds would generate substantial net proceeds (HK$109,000,000) to reduce indebtedness and benefit creditors, with no opposition and no prejudice shown to creditors, the court was satisfied to grant the validation orders.

Court Disposition

Validation orders granted in terms of the summons; no order as to costs.

Orders

  • Validation order in terms of paragraph 1 of the summons (validation of share transfers and validation of capital reduction, share consolidation and issue of convertible bonds)
  • No order as to costs