RE CHASE ON DEVELOPMENT LTD

HCCW 374/2019

[2020] HKCFI 629

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 374 OF 2019

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D E C I S I O N

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1.  On 21 November 2019 Standard Chartered Bank (“SCB”) issued a petition to wind up the Company on the grounds of insolvency. SCB relies on a statutory demand dated 5 August 2019 for a debt totalling in excess of $15,000,000 to prove insolvency. The debt is not in dispute.

2.  The Company is a subsidiary of Sun Cheong Creative Development Holdings Limited (“Listco”), which is listed on the Main Board of the Stock Exchange of Hong Kong.  It is a guarantor of the Company’s debt.  Listco is currently attempting to negotiate a restructuring of its debt with its creditors.  The proposal it put to its banking and trade creditors is explained briefly in the 2^nd affirmation of Chan Kam Hon Ivan which is dated 12 March 2020.

3.  The Company seeks a five-week adjournment of the petition to allow Listco to progress the restructuring. There is no evidence of creditor support for an adjournment of the current petition other than certain things I was told this morning by Ms Cheung. It is clear from the affirmation of Li Siu Chi Steven of SCB’s Group Special Assets Management division that SCB has no confidence in Listco’s financial position or its restructuring proposal.

4.  In cases in which a company is clearly insolvent and a petitioner’s debt is not in dispute an important consideration, when a court it being asked to adjourn a petition by a Company in order to allow it to attempt to restructure its debt, are the views of its unsecured creditors.

5.  If the creditors are taking different views the Court will normally take into account all the circumstances including the following considerations:

(a)  A qualitative assessment of the number of creditors for and against a winding-up order.  It is not just a matter of counting the number of creditors in favour and those against or the proportion of the value of the debt they hold.

(b)  The reasons proferred by the supporting and opposing creditors.

(c)  The feasibility of the proposed restructuring.

See Re Grand T G Gold Holdings Ltd [1].

6.  In the present case, the Company has not been able to produce a single letter from an unsecured creditor indicating support to the outline restructuring proposal that so far has been presented to the various classes of unsecured creditors.  Neither has the Company been enable to produce a letter from a single unsecured creditor supporting an adjournment of the petition.  It seems to me that in these circumstances the proper approach is for the Court to make a decision which reflects what appears to be the view of the unsecured creditors of what is in their commercial best interests.  Clearly SCB, a sophisticated creditor familiar with the restructuring of listed companies has taken a view that rehabilitation is unrealistic and it would appear that no other unsecured creditor has been prepared to express in writing the alternative view.

7.  On the contrary, there are other petitions issued against other members of the group.  In the circumstances, it seems to me to be clear that the appropriate course is for the Court to make the normal winding-up order.