RE SINO OIL AND GAS HOLDINGS LTD

HCCW 281/2022

[2025] HKCFI 1370

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING UP) NO 281 OF 2022

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REASONS FOR JUDGMENT

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1.  At the 7^th callover hearing of the petition presented against Sino Oil and Gas Holdings Limited (中國油氣控股有限公司) (“Company”) on 17 August 2022 (as amended on 1 November 2022) (“Petition”), I made a usual winding up order against the Company. These are the reasons for my judgment.

2.  The factual background relevant to the Petition have been stated in paragraphs 4 to 16 of the judgment dated 24 April 2024 in HCMP 252/2023[1] (“2024 Judgment”), which concerned an application made by the Company for sanction of a scheme of arrangement to restructure and compromise its debts to the extent of HK$2,431.3 million (representing 99.3% of the debts owed to the unsecured creditors) of which HK$1,847.9 million (76%) was owed to Crescent Spring Investment Holdings Ltd (“CS”) and HK$566.3 million (23.3%) was owed to more than 100 individuals who are holders of the Corporate Bonds issued by the Company[2] (“Scheme”).

3.  The Company was (and still is) grossly insolvent and unable to pay its debts. The only ground put forward by the Company in opposition to the Petition was that the Company would put forward a scheme to restructure and compromise almost all of its debts which, if implemented, would restore its insolvency. The Petition was repeatedly adjourned to enable the Company to implement the Scheme.

4.  Although the Scheme was approved by the requisite majorities of creditors at the scheme meeting, it was opposed by 35 holders of the Corporate Bonds including the petitioner. At the end of the sanction hearing on 29 February 2024, this Court indicated that it would not sanction the Scheme and would leave it to the Company to consider whether to withdraw the application. By letter dated 14 March 2024, the Company informed the court that it would continue to pursue the application. On 24 April 2024, this Court handed down the 2024 Judgment dismissing the application for the reasons stated therein. The Company appealed against the dismissal of the application. In the meantime, the Petition was adjourned pending determination of the appeal. The Court of Appeal dismissed the appeal on 13 September 2024.

5.  The Company was well aware that despite the dismissal of the application in HCMP 252/2023, it was open to it to put forward a revised restructuring proposal so long as it does not contain the unusual or questionable features discussed in the 2024 Judgment and is presented to the creditors and the court in a full and fair manner. Indeed, Mr John Hui, who represented the Company, indicated at the sanction hearing that the Company would decide whether to withdraw the application and start afresh and would inform the court of its position.

6.  At the 6^th hearing of the Petition on 23 December 2024:

(1)  Mr Hui applied for a 3-month adjournment on the ground that the Company had “made effort to reformulate and simplify its scheme and made significant progress in its negotiations with a new UK-based investor (“UK Investor”), and is in a position to put forward a revised restructuring plan”.[3]

(2)  The Company said that the proposal involved acquiring the debt held by CS for US$80 million, which had been considered by CS[4], and a further 3 months were required for CS to obtain the necessary approval to enter into a debt assignment agreement and other necessary arrangements with the UK Investor to effect the acquisition. This was despite the fact that CS already appointed receivers over the “CBM Project”[5], which had been charged to CS as security for the debt owed to it.

(3)  The petitioner did not oppose the proposed adjournment whereupon the Petition was adjourned to 31 March 2025.

7.  On 27 March 2025, the Company filed Wan 11^th to set out the developments relating to the proposed restructuring. However, it is clear that the so-called developments are no more than (1) a repetition of the proposal to acquire the debt and the security held by CS mentioned at the 6^th hearing which CS did not accept; and (2) a belated letter dated 16 March 2025 issued by the UK Investor to CS proposing to increase the cash payment from US$80 million to US$100 million; and (3) the Company had obtained support letters from 42 unsecured creditors representing 18% in value of the total claims in support of the “ongoing restructuring efforts”.

8.  Ms Tania Tse, counsel for the petitioner, asks the court to make an immediate winding up order against the Company as the Company is insolvent and has not been able to show that there is any concrete restructuring proposal to justify a further adjournment of the Petition[6].

9.  I do not see any valid ground for the court to grant a further adjournment of the Petition:

(1)  The Company has had more than a year to put forward a revised restructuring proposal but has not been able to do so. There is no evidence before the court to show that there is any viable restructuring proposal which the Company will be able to implement in the near future, let alone one which has the support of the majorities of creditors.

(2)  On the Company’s own case, no restructuring proposal can be put forward unless CS agrees to sell its debt and security to the UK Investor. CS has made a decision not to accept the proposed acquisition put forward by the UK Investor.

(3)  Although the UK investor belatedly increased the amount proposed to be paid to CS, there is simply no evidence to show that the UK Investor has the requisite financial resources to pay the amount in cash or that the revised proposal will be accepted by CS.