Re UDL Employment Services Ltd.
The court applied the rights-based test for class constitution and held that internal creditors (including subsidiaries) were properly included in the voting class because their legal rights as to unsecured claims were not so dissimilar as to make consultation impracticable; disputed claims properly valued at zero after bona fide assessment may be excluded from voting; identified technical irregularities were waived; substantial independent creditor support existed and therefore the court would exercise its discretion to sanction the 25 Schemes, subject to the Stock Exchange approval condition precedent.
- Citation
- Re UDL Employment Services Ltd.
- Parties
- Petitioner (company): UDL Holdings Limited; Petitioner (subsidiary): UDL Argos Engineering & Heavy Industries Co. Ltd; Petitioner (subsidiary): Everpoint Company Limited; Petitioner (subsidiary): Econo Plant Hire Company Limited; Petitioner (subsidiary): East Coast Towing Limited; Petitioner (subsidiary): Universal Dockyard Limited; Petitioner (subsidiary): UDL Ship Management Limited; Petitioner (subsidiary): UDL Marine Pte Limited; Petitioner (subsidiary): UDL Marine Operation Limited; Petitioner (subsidiary): UDL Contracting Limited; Petitioner (subsidiary): UDL Civil Contractors Limited; Petitioner (subsidiary): UDL Employment Services Limited; Petitioner (subsidiary): Wellful Time Limited; Petitioner (subsidiary): UDL Steel Fabricators & Shipbuilders Company Limited; Petitioner (subsidiary): UDL Management Limited; Petitioner (subsidiary): UDL Investment Limited; Petitioner (subsidiary): UDL E & M (BVI) Limited; Petitioner (subsidiary): UDL Dredging Limited; Petitioner (subsidiary): S.K. LUK Construction Company Limited; Petitioner (subsidiary): Keen Yield Investment Limited; Petitioner (subsidiary): Graceful Ease Investment Limited; Petitioner (subsidiary): Full Keen Investment Limited; Petitioner (subsidiary): Faith On International Limited; Petitioner (subsidiary): Fairking Transportation Limited; Petitioner (subsidiary): Exact Profit Limited; Opposing Party / Disputed Creditor: Nishimatsu Construction Company Limited; Opposing Parties (preferential Creditors Represented by Director of Legal Aid): Opposing Preferential Creditors; Creditor (presented Winding Up Petition; Did Not Appear): HSBC
- Court
- Court of First Instance
- Jurisdiction
- Hong Kong
- Judgment Date
- 18 April 2000
- Case Number
- HCMP419/2000
- Procedural Posture
- Schemes of Arrangement Under Companies Ordinance (cap.32) S166 / Sanction Hearing and Judgment (sanction Granted)
- Outcome
- Court sanctioned the 25 Schemes of Arrangement (sanction granted) subject to fulfillment of the Stock Exchange approval condition precedent by 30 April 2000 or such later date as the court allows; costs reserved.
- Legal Topics
- Schemes of Arrangement, Creditor Class Meetings, Classification of Creditors, Disputed Claims and Voting, Preferential Creditors, Court Discretion to Sanction, Procedural Irregularities
- Source Language
- EN
Case Brief
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Parties
UDL Holdings Limited
Petitioner (company)
UDL Argos Engineering & Heavy Industries Co. Ltd
Petitioner (subsidiary)
Everpoint Company Limited
Petitioner (subsidiary)
Econo Plant Hire Company Limited
Petitioner (subsidiary)
East Coast Towing Limited
Petitioner (subsidiary)
Universal Dockyard Limited
Petitioner (subsidiary)
UDL Ship Management Limited
Petitioner (subsidiary)
UDL Marine Pte Limited
Petitioner (subsidiary)
UDL Marine Operation Limited
Petitioner (subsidiary)
UDL Contracting Limited
Petitioner (subsidiary)
UDL Civil Contractors Limited
Petitioner (subsidiary)
UDL Employment Services Limited
Petitioner (subsidiary)
Wellful Time Limited
Petitioner (subsidiary)
UDL Steel Fabricators & Shipbuilders Company Limited
Petitioner (subsidiary)
UDL Management Limited
Petitioner (subsidiary)
UDL Investment Limited
Petitioner (subsidiary)
UDL E & M (BVI) Limited
Petitioner (subsidiary)
UDL Dredging Limited
Petitioner (subsidiary)
S.K. LUK Construction Company Limited
Petitioner (subsidiary)
Keen Yield Investment Limited
Petitioner (subsidiary)
Graceful Ease Investment Limited
Petitioner (subsidiary)
Full Keen Investment Limited
Petitioner (subsidiary)
Faith On International Limited
Petitioner (subsidiary)
Fairking Transportation Limited
Petitioner (subsidiary)
Exact Profit Limited
Petitioner (subsidiary)
Nishimatsu Construction Company Limited
Opposing Party / Disputed Creditor
Opposing Preferential Creditors
Opposing Parties (preferential Creditors Represented by Director of Legal Aid)
HSBC
Creditor (presented Winding Up Petition; Did Not Appear)
Procedural Posture
Schemes of Arrangement Under Companies Ordinance (cap.32) S166 / Sanction Hearing and Judgment (sanction Granted)
Legal Issues
- 1 whether internal creditors (company and subsidiaries) should be excluded from voting at creditor meetings
- 2 whether classes of creditors were properly constituted under s166 Cap.32
- 3 whether disputed creditors may be excluded or have votes valued at zero for voting purposes
Ratio Decidendi
The court applied the rights-based test for class constitution and held that internal creditors (including subsidiaries) were properly included in the voting class because their legal rights as to unsecured claims were not so dissimilar as to make consultation impracticable; disputed claims properly valued at zero after bona fide assessment may be excluded from voting; identified technical irregularities were waived; substantial independent creditor support existed and therefore the court would exercise its discretion to sanction the 25 Schemes, subject to the Stock Exchange approval condition precedent.
Court Disposition
Court sanctioned the 25 Schemes of Arrangement (sanction granted) subject to fulfillment of the Stock Exchange approval condition precedent by 30 April 2000 or such later date as the court allows; costs reserved.
Orders
- Sanction granted to the 25 Schemes of Arrangement before the court
- Sanction conditional on obtaining Stock Exchange approval by 30 April 2000 or such later date as the court permits
Full Case Text
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