|
HCMP132/2005
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO.132 OF 2005
---------------------------
| |
IN THE MATTER OF Merchants (Hong Kong) Limited (商貿(香港)有限公司) |
| |
and |
| |
IN THE MATTER OF section 166 of the Companies Ordinance, (Cap.32) of the Laws of Hong Kong |
---------------------------
Before : Deputy High Court Judge Poon in Court
Date of Hearing : 19 April 2005
Date of Judgment : 19 April 2005
----------------------
J U D G M E N T
-----------------------
1. This is the petition by Merchants (Hong Kong) Limited (“the Company”) for sanction of a scheme of arrangement with its creditors (“the Scheme”) pursuant to section 166 of the Companies Ordinance.
The Company
2. The Company was incorporated in Hong Kong on 1 February 2002 with an authorized share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. The total number of shares issued is 2 and the total paid up value of the share capital is HK$2.00. It used to carry on the business of trading of base metal before it became dormant in or about the 3rd quarter of 2003.
3. The Company is held by Shanghai Merchants Holdings Limited (“SMHL”) through an investment holding company, First Landmark Limited. SMHL is a listed company, with a number of associated companies forming a group (“the Group”).
Events leading to the Scheme
4. On 17 June 2003, Kwan J appointed joint receivers and managers in respect of SMHL, following the arrest of its former chairman and controlling shareholder, Mr Chau Ching Ngai. Trading of SMHL has since been suspended. On 10 November 2004, the Hong Kong Stock Exchange announced that unless SMHL could put forward a viable restructuring proposal, demonstrating that SMHL as a group possesses, inter alia, sufficient operations and/or sustainable value in its assets, its listing status will be cancelled by 9 May 2005.
5. In order to protect SMHL’s listing status, the Group strives to compile a viable resumption proposal. Integral to such is the restructuring of the Company’s financial position.
6. The Company had been trading at a loss since 2003. It has no cash or realizable assets. Its only receivable is a claim against a BVI company called Great Center Ltd in HCA2433/2003, arising from an unauthorized transfer of US$4.5 million.
7. The Company has considerable liabilities totaling some HK$130 million. A breakdown of the creditors and the corresponding debts can be found in paragraph 14(3) of the petition thus.
|
Name of Creditors (so far as
is known from available records)
|
Outstanding Amount (HK$)
|
Percentage (%) out
of all outstanding liabilities
|
| Sudamin Metal |
|
|
|
Regent Roll Limited
|
|
|
|
Identity Unknown
|
|
|
|
Gold (Hong Kong) Limited
|
|
|
|
SMHL
|
|
|
|
Worldmark (Far East) Limited
|
|
|
|
Total
|
|
|
Gold (Hong Kong) Limited and Worldmark (Far East) Limited are companies of the Group.
The Scheme
8. The objective of the Scheme is to pay off the Scheme creditors by a lump sum of HK$5 million (after deduction of expenses under the Scheme) on a pari passu basis. The sum of HK$5 million is to be raised by the Company with an independent licensed moneylender, Ranbridege Finance Limited.
9. By implementing the Scheme, the Company will be hopefully placed in a better position of purging any liability unrecorded and unbeknown to its existing management. This will also be a chance to reflect positively on the resumption proposed by SMHL.
Court meeting of the Scheme creditors
10. On 2 February 2005, I gave leave for a meeting of the Scheme creditors to be held with consequential directions.
11. On 28 February 2005, the court meeting was duly convened. At the meeting, Gold (Hong Kong) Limited, SMHL, Worldmark (Far East) Limited were all present. They constituted about 88.2% of the aggregate recorded value of the Company’s liabilities. Other creditors were absent. The Scheme was duly explained to the creditors present in the terms as stated in the explanatory statement. The creditors present then passed the resolution for approval of the Scheme unanimously.
Approving the Scheme
12. In dealing with applications of this kind, the court first needs to be satisfied that all the jurisdictional requirements are fully compiled with. They are :
| (1) |
The classes of creditors must be properly constituted. |
| |
|
| (2) |
The court meeting was duly convened in accordance with the directions given by the court. |
| |
|
| (3) |
The creditors have been given a sufficient explanation of the scheme and its effects and sufficient information to enable them to make a reasonable judgment as to how to vote at the meeting. |
| |
|
| (4) |
The requisite majority has voted in favour of the scheme. |
See Re China Light & Power Co. Ltd [1998] 1 HKLRD 158, per Le Pichon J (as she then was) at 181F-184I.
13. If the jurisdictional requirements are fully complied with, the court next considers the overall merits of the scheme. The test is whether the proposal is such that an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve. There is ample authority for this proposition. See e.g Re Jinro (HK) International Limited, HCMP1503/2004, unreported, 3 August 2004, at para.33, Re Tai Construction Engineering Company Limited, HCMP177/2005, unreported, 8 April 2005, para.16.
14. Here, I am satisfied that all the jurisdictional requirements have been fully complied with. On the overall merits, I am also satisfied that the Scheme meets the test above.
15. For these reasons, I will sanction the Scheme.
| |
(J. Poon)
Deputy High Court Judge |
Mr Jose-Antonio Maurellet, instructed by Messrs P.C. Woo & Co., for the Petitioner
|