Re Exact Profit Ltd.

Re Exact Profit Ltd.

The court applied the rights-based test for class constitution: where legal rights are not dissimilar and no confiscation or injustice results, internal creditors may vote as part of the same class; disputed claims may be valued at zero for voting if that valuation was arrived at in good faith following review; given substantial independent creditor support and absence of unfair prejudice, the court will exercise its discretion to sanction the schemes (subject to conditions).

Citation
Re Exact Profit 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 Creditors: Opposing Preferential Creditors
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
18 April 2000
Case Number
HCMP432/2000
Procedural Posture
Scheme of Arrangement Under the Companies Ordinance (cap.32) / Sanction Hearing and Judgment (sanction Granted 18 April 2000)
Outcome
Sanction granted to all 25 Schemes of Arrangement; costs reserved; sanction conditional on fulfillment of Stock Exchange approval by 30 April 2000 or such later date as the court allows.
Legal Topics
Scheme of Arrangement, Class Composition, Voting Rights, Preferential Creditors, Disputed Claims, Moratorium, Stock Exchange Approval
Source Language
EN
Company Law Insolvency Law Corporate Restructuring Scheme of Arrangement Class Composition Voting Rights 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

Opposing Creditor

Opposing Preferential Creditors

Opposing Creditors

Procedural Posture

Scheme of Arrangement Under the Companies Ordinance (cap.32) / Sanction Hearing and Judgment (sanction Granted 18 April 2000)

Legal Issues

  1. 1 Whether internal creditors may validly vote in the same class as other unsecured creditors for the purposes of s.166 Companies Ordinance
  2. 2 Whether disputed creditors may be excluded from voting where their claims are valued at zero after good faith assessment
  3. 3 Whether preferential creditors required a separate class meeting or were prejudiced by the scheme

Ratio Decidendi

The court applied the rights-based test for class constitution: where legal rights are not dissimilar and no confiscation or injustice results, internal creditors may vote as part of the same class; disputed claims may be valued at zero for voting if that valuation was arrived at in good faith following review; given substantial independent creditor support and absence of unfair prejudice, the court will exercise its discretion to sanction the schemes (subject to conditions).

Court Disposition

Sanction granted to all 25 Schemes of Arrangement; costs reserved; sanction conditional on fulfillment of Stock Exchange approval by 30 April 2000 or such later date as the court allows.

Orders

  • Sanction of 25 Schemes of Arrangement granted
  • Order conditional on Stock Exchange approval to be obtained by 30 April 2000 or such later date as the court may allow