Re UDL E & M (BVI) Ltd.

Re UDL E & M (BVI) Ltd.

The court applied the rights-based test for class composition and held that internal creditors (including subsidiaries) may vote in the same class where their legal rights are not so dissimilar as to make consultation on common interest impossible; disputed creditors whose claims were assessed in good faith at HK$0 may be excluded from voting; the meetings were not unrepresentative and technical irregularities were waived. Accordingly the court sanctioned the 25 Schemes, conditional on fulfillment of the Stock Exchange approval requirement.

Citation
Re UDL E & M (BVI) 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; Disputed Creditor / Objector: Nishimatsu Construction Company Limited; Preferential Creditors / Objectors: Opposing Preferential Creditors (various); Creditor (did Not Appear): HSBC
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
18 April 2000
Case Number
HCMP424/2000
Procedural Posture
Scheme of Arrangement (companies Ordinance) / Sanction Hearing Judgment Handed Down
Outcome
The Court sanctioned the 25 Schemes of Arrangement (subject to conditions).
Legal Topics
Scheme of Arrangement, Creditor Classification, Voting at Creditor Meetings, Preferential Creditors, Disputed Claims, Moratorium, Stock Exchange Approval
Source Language
EN
Company Law Insolvency Law Corporate Restructuring Scheme of Arrangement Creditor Classification Voting at Creditor Meetings Preferential Creditors Disputed Claims +2 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

Disputed Creditor / Objector

Opposing Preferential Creditors (various)

Preferential Creditors / Objectors

HSBC

Creditor (did Not Appear)

Procedural Posture

Scheme of Arrangement (companies Ordinance) / Sanction Hearing Judgment Handed Down

Legal Issues

  1. 1 whether internal creditors may vote as part of the same class at scheme meetings
  2. 2 whether preferential creditors form a separate class requiring separate meetings
  3. 3 whether disputed creditors can be excluded from voting where claims are valued at zero

Ratio Decidendi

The court applied the rights-based test for class composition and held that internal creditors (including subsidiaries) may vote in the same class where their legal rights are not so dissimilar as to make consultation on common interest impossible; disputed creditors whose claims were assessed in good faith at HK$0 may be excluded from voting; the meetings were not unrepresentative and technical irregularities were waived. Accordingly the court sanctioned the 25 Schemes, conditional on fulfillment of the Stock Exchange approval requirement.

Court Disposition

The Court sanctioned the 25 Schemes of Arrangement (subject to conditions).

Orders

  • Sanctioned the 25 Schemes of Arrangement presented by UDL Holdings Limited and its subsidiaries
  • Sanction granted conditional upon Stock Exchange approval being obtained by 30 April 2000 or such later date as the court may allow