RE UDL HOLDINGS LTD

RE UDL HOLDINGS LTD

The court refused to make a winding-up order because the evidence showed a substantial in-principle majority of creditors supported the proposed scheme (above the blocking threshold), the alleged misstatements and omissions were not shown to be material or made in bad faith, the Ernst & Young analyses were not misleading in context, and there were reasonable prospects the requisite majorities would approve a scheme; therefore it would be an improper exercise of discretion to wind up the company at this stage and the petition was adjourned with an order nisi in favour of the Company and opposing creditors.

Citation
RE UDL HOLDINGS LTD
Parties
Petitioner: The Hongkong and Shanghai Banking Corporation Limited; Company / Respondent: UDL Holdings Limited; Supporting Creditor: Nishimatsu Construction Co. Limited; Supporting Creditor: Apple Daily Printing Limited; Supporting Creditor: Dragages et Travaux Publics (HK) Limited; Opposing Creditor: Wonderland Development Co. Ltd.; Opposing Creditor: The Kwangtung Provincial Bank; Opposing Creditor: Overseas Chinese Banking Corporation Ltd.; Opposing Creditor: G.E. Capital Finance Ltd.; Official Receiver: Official Receiver
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
10 May 1999
Case Number
HCCW756/1998
Procedural Posture
Companies Winding Up Petition With S.166 Scheme of Arrangement Application / Adjourned Hearing on Petition and Consideration of Convening Court Meeting Under S.166; Decision Whether to Make Winding Up Order
Outcome
Winding-up order refused at this stage; order nisi made in favour of the Company and the opposing creditors; petition adjourned to permit scheme process to proceed
Legal Topics
Winding Up Petitions, Scheme of Arrangement (s.166 Companies Ordinance), Creditor Majority and Blocking Minority, Adjournments, Classification of Creditors, Misleading Communications to Creditors, Liquidation Vs Rescue Restructuring
Source Language
EN
Company Law Insolvency Civil Procedure Winding Up Petitions Scheme of Arrangement (s.166 Companies Ordinance) Creditor Majority and Blocking Minority Adjournments Classification of Creditors +2 more

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Parties

The Hongkong and Shanghai Banking Corporation Limited

Petitioner

UDL Holdings Limited

Company / Respondent

Nishimatsu Construction Co. Limited

Supporting Creditor

Apple Daily Printing Limited

Supporting Creditor

Dragages et Travaux Publics (HK) Limited

Supporting Creditor

Wonderland Development Co. Ltd.

Opposing Creditor

The Kwangtung Provincial Bank

Opposing Creditor

Overseas Chinese Banking Corporation Ltd.

Opposing Creditor

G.E. Capital Finance Ltd.

Opposing Creditor

Official Receiver

Official Receiver

Procedural Posture

Companies Winding Up Petition With S.166 Scheme of Arrangement Application / Adjourned Hearing on Petition and Consideration of Convening Court Meeting Under S.166; Decision Whether to Make Winding Up Order

Legal Issues

  1. 1 Whether there is substantial in principle support (≈75% by value) for a scheme of arrangement to justify adjournments and refusal to make a winding-up order
  2. 2 Whether adjournments beyond short periods are appropriate pending a proposed restructuring
  3. 3 Whether creditors' consents were vitiated by misleading communications (5 January letter and Ernst & Young letters)

Ratio Decidendi

The court refused to make a winding-up order because the evidence showed a substantial in-principle majority of creditors supported the proposed scheme (above the blocking threshold), the alleged misstatements and omissions were not shown to be material or made in bad faith, the Ernst & Young analyses were not misleading in context, and there were reasonable prospects the requisite majorities would approve a scheme; therefore it would be an improper exercise of discretion to wind up the company at this stage and the petition was adjourned with an order nisi in favour of the Company and opposing creditors.

Court Disposition

Winding-up order refused at this stage; order nisi made in favour of the Company and the opposing creditors; petition adjourned to permit scheme process to proceed

Orders

  • Winding-up order not made; petition adjourned
  • Order nisi in favour of the Company and the opposing creditors