Re East Coast Towing Ltd.

Re East Coast Towing Ltd.

The court applied the rights test for classing creditors, rejected objections that internal creditors invalidated the meetings because their legal rights were not dissimilar and preferential rights were preserved; disputed claims properly valued and excluded for voting where assessed at zero in good faith; substantial independent creditor support existed and technical irregularities were waivable; accordingly the court sanctioned the 25 schemes subject to the stated condition precedent.

Citation
Re East Coast Towing Ltd.
Parties
Petitioner: UDL Holdings Limited; Petitioner: UDL Argos Engineering & Heavy Industries Co. Ltd; Petitioner: Everpoint Company Limited; Petitioner: Econo Plant Hire Company Limited; Petitioner: East Coast Towing Limited; Petitioner: Universal Dockyard Limited; Petitioner: UDL Ship Management Limited; Petitioner: UDL Marine Pte Limited; Petitioner: UDL Marine Operation Limited; Petitioner: UDL Contracting Limited; Petitioner: UDL Civil Contractors Limited; Petitioner: UDL Employment Services Limited; Petitioner: Wellful Time Limited; Petitioner: UDL Steel Fabricators & Shipbuilders Company Limited; Petitioner: UDL Management Limited; Petitioner: UDL Investment Limited; Petitioner: UDL E & M (BVI) Limited; Petitioner: UDL Dredging Limited; Petitioner: S.K. LUK Construction Company Limited; Petitioner: Keen Yield Investment Limited; Petitioner: Graceful Ease Investment Limited; Petitioner: Full Keen Investment Limited; Petitioner: Faith On International Limited; Petitioner: Fairking Transportation Limited; Petitioner: Exact Profit Limited; Opposing Creditor: Nishimatsu Construction Company Limited; Opposing Preferential Creditors: Opposing Preferential Creditors (represented by Director of Legal Aid)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
18 April 2000
Case Number
HCMP412/2000
Procedural Posture
Company Petitions for Sanction of Schemes of Arrangement Under Companies Ordinance (cap.32) S166 / Sanction Hearing (court of First Instance)
Outcome
Court sanctioned the 25 Schemes of Arrangement subject to fulfilment of the Stock Exchange approval condition precedent by 30 April 2000 or such later date as the court allows; costs reserved.
Legal Topics
Scheme of Arrangement, Classification of Creditors, Voting Rights, Disputed Claims, Preferential Creditors, Court Discretion and Sanction
Source Language
EN
Company Law Insolvency Law Securities Regulation Scheme of Arrangement Classification of Creditors Voting Rights Disputed Claims Preferential Creditors +1 more

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Parties

UDL Holdings Limited

Petitioner

UDL Argos Engineering & Heavy Industries Co. Ltd

Petitioner

Everpoint Company Limited

Petitioner

Econo Plant Hire Company Limited

Petitioner

East Coast Towing Limited

Petitioner

Universal Dockyard Limited

Petitioner

UDL Ship Management Limited

Petitioner

UDL Marine Pte Limited

Petitioner

UDL Marine Operation Limited

Petitioner

UDL Contracting Limited

Petitioner

UDL Civil Contractors Limited

Petitioner

UDL Employment Services Limited

Petitioner

Wellful Time Limited

Petitioner

UDL Steel Fabricators & Shipbuilders Company Limited

Petitioner

UDL Management Limited

Petitioner

UDL Investment Limited

Petitioner

UDL E & M (BVI) Limited

Petitioner

UDL Dredging Limited

Petitioner

S.K. LUK Construction Company Limited

Petitioner

Keen Yield Investment Limited

Petitioner

Graceful Ease Investment Limited

Petitioner

Full Keen Investment Limited

Petitioner

Faith On International Limited

Petitioner

Fairking Transportation Limited

Petitioner

Exact Profit Limited

Petitioner

Nishimatsu Construction Company Limited

Opposing Creditor

Opposing Preferential Creditors (represented by Director of Legal Aid)

Opposing Preferential Creditors

Procedural Posture

Company Petitions for Sanction of Schemes of Arrangement Under Companies Ordinance (cap.32) S166 / Sanction Hearing (court of First Instance)

Legal Issues

  1. 1 Whether classes of creditors were properly constituted given participation of internal creditors
  2. 2 Whether disputed creditors (Nishimatsu) should have been allowed to vote and be treated as creditors
  3. 3 Whether preferential creditors were prejudiced and required separate class meetings

Ratio Decidendi

The court applied the rights test for classing creditors, rejected objections that internal creditors invalidated the meetings because their legal rights were not dissimilar and preferential rights were preserved; disputed claims properly valued and excluded for voting where assessed at zero in good faith; substantial independent creditor support existed and technical irregularities were waivable; accordingly the court sanctioned the 25 schemes subject to the stated condition precedent.

Court Disposition

Court sanctioned the 25 Schemes of Arrangement subject to fulfilment of the Stock Exchange approval condition precedent by 30 April 2000 or such later date as the court allows; costs reserved.

Orders

  • Schemes of Arrangement for UDL Holdings Limited and 24 subsidiaries sanctioned
  • Sanction conditional upon Stock Exchange approval being obtained by 30 April 2000 or such later date as court allows