RE CHINA SCE GROUP HOLDINGS LTD

HCMP 1948/2025

[2026] HKCFI 4824

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1948 OF 2025

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REASONS FOR DECISION

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Overview

1.  By order dated 24 March 2026 following the last hearing on even date (“Convening Hearing”), this Court granted leave to China SCE Group Holdings Limited (“Company”) to convene a Scheme Meeting of its Scheme Creditors in connection with the proposed Scheme[1].

2.  The Scheme Meeting was convened on 18 May 2026, and the Scheme was duly approved.  381 out of 385 Scheme Creditors representing approximately 88.1% in value of those present and voting voted in favour of the Scheme.

Background

3.  The Company was incorporated in the Cayman Islands and registered in Hong Kong as a non-Hong Kong company.  The shares of the Company have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”) since 2010 (stock code: 1966.HK).  The Company is the ultimate holding company of the Group and serves as one of the Group’s main offshore financing platforms. Its subsidiaries are incorporated in the Mainland, the Cayman Islands, the British Virgin Islands (“BVI”) and Hong Kong.  The Group is engaged in property development, commercial and property management, and long-term rental apartment operations across the Mainland.  Since mid-2021, the Group has faced liquidity difficulties due to the downturn in the Mainland real estate market. The Company defaulted on the Existing 2021 Syndicated Loan, triggering cross-defaults on its other debts.  As at 30 June 2025, offshore principal defaults amounted to approximately RMB 17.45 billion.

4.  As at 31 December 2025:

(1)  The Company’s total assets were approximately RMB 35.41 billion, of which its current assets were approximately RMB 32.93 billion and non-current assets were approximately RMB 2.48 billion.  The Company’s total liabilities, which were all current liabilities, were approximately RMB 35.96 billion.

(2)  The Group’s total assets and liabilities were approximately RMB 88.62 billion and RMB 86.56 billion respectively, and its current assets and current liabilities were RMB 58.98 billion and RMB 78.91 billion respectively.

5.  The liabilities under the Existing Debt (i.e. the Existing Notes and the Existing Loans) are approximately US$2.27 billion and represent approximately 87.16% of the Company’s total existing liabilities arising from financing arrangements as of 31 December 2025.  Since late 2023, the Company has taken steps to formulate and implement a proposal to restructure the Existing Debt.  On 28 November 2024, the Company reached an agreement in-principle on major commercial terms of the Restructuring with the Ad Hoc Group.  This led to the launch of the Restructuring Support Agreement (“RSA”) on 26 June 2025, which was further amended after consultation with the Bank Group on 20 November 2025.  By 1 March 2026, Scheme Creditors representing approximately 78% of the principal amount of the Existing Debt had acceded to the Amended RSA.

The Scheme

6.  The key effect of the Scheme is the release of the Scheme Creditors’ Claims under the Existing Debt, which comprise:

(1)  The Existing Notes (the Company’s liability as issuer)

No.	Note	Outstanding Principal as of 31 December 2025	Interest (p.a.)	Maturity Date
1.	Existing April 2024 Notes	US$ 500m	7.375%	9 April 2024
2.	Existing September 2024 Notes	US$ 450m	5.95%	29 September 2024
3.	Existing May 2025 Notes	US$ 500m	7.0%	2 May 2025
4.	Existing February 2026 Notes	US$ 350m	6.0%	4 February 2026

(2)  The Existing Loans (the Company’s liability as borrower)

No.	Syndicated Loan	Outstanding Principal as of 31 December 2025	Interest (p.a.)	Maturity Date
1.	Existing 2021 Syndicated Loan	HK$ 315.9m & US$ 308.25m	Hibor + 3.7% & Term SOFR + 3.7% + credit adjustment spread 0.114480%	29 September 2024
2.	Existing 2023 Syndicated Loan	HK$ 255.4m & US$ 89.1m	Hibor + 6.35% & Term SOFR + 6.35%	6 October 2024

7.  All Existing Notes and Existing Loans benefit from a common security package comprising guarantees from 22 wholly-owned Hong Kong and BVI subsidiaries (“Subsidiary Guarantors”) and charges over each of their shares (“Share Charges”).  The Existing Notes and their guarantees are governed by New York law, while the Existing Loans and their guarantees are governed by Hong Kong law.

8.  Under the Scheme, the Scheme Creditors will, inter alia, release the following claims which are defined in the Scheme as “Scheme Claims”, “Ancillary Claims” and “Restructuring Claims” against any “Released Person” in exchange for the Scheme Consideration.

9.  The overall economic effect of the Scheme (assuming full subscription of Option 1 and Option 3 and the full conversion of the Mandatory Convertible Bonds (“MCBs”)) would be to reduce the liabilities of the Company by US$1.7 billion, representing a total reduction of 33.2% of the Company’s liabilities.

The Options

10.  The Scheme Consideration comprises one or a combination of three Options all issued by the Company, which are set out in the ES, Section 8.2(a) and Scheme, Clause 10.1.  A brief summary of each of the Options is as follows:

Options	Scheme Creditor’s Claim “Cap” (US$ )	Brief description
1	560,000,000	A combination of Cash and Short Term Notes: PIK-able 4-year amortizing notes
2	None	A combination of MCBs, 1966 Shares[2],and Medium Term Notes: PIK-able 6-year amortizing notes
3	250,000,000	Long Term Notes: PIK-able 8-year amortizing notes

11.  The New Notes and MCBs will be guaranteed by the New Subsidiary Guarantors and secured on a pari passu basis by collateral comprising charges over (i) the shares of certain New Subsidiary Guarantors, and (ii) the Allocation Account[3].

12.  In addition to the Scheme Consideration:

(1)  Scheme Creditors who acceded to the Amended RSA before the applicable Consent Fee Deadlines will receive a Consent Fee in cash equal to either 0.15% (Early Consent Fee) or 0.05% (Base Consent Fee) of the aggregate principal amount of the relevant Eligible Consenting Debt.

(2)  The Company will also pay the AHG Work Fee to the Ad Hoc Group and the AHG Advisor Fee and Bank Group’s Advisor Fee to the Ad Hoc Group’s Advisors and the Bank Group’s Advisors respectively.

13.  The Options differ in, inter alia, form, tenor, interest rate, redemption / repayment period and price, and whether they are subject to a “cap”:

(1)  Option 1: If a Scheme Creditor elects to receive Option 1, 2.5% of the portion of the Scheme Creditor’s Claim will be paid in cash (1.0% on the Restructuring Effective Date and 1.5% falling 18 months thereafter as a special distribution), and 27.5% will be exchanged into Short Term Notes having a tenor of 4 years and bearing interest at 2.00% p.a.  For the Short Term Notes, all interest for the first 30 months will be paid in kind and thereafter in cash.  The remaining 70% of the claim value will be forfeited.

(2)  Option 2: If a Scheme Creditor elects to receive or is allocated Option 2, the portion of the Scheme Creditor’s Claim will be exchanged into: (i) MCBs mandatorily convertible into 1966 Shares at HK$1.60 per share in three equal instalments over 18 months (equal to 41.25% of the claim); (ii) 1966 Shares at HK$1.60 per share (equal to 13.75% of the claim); and (iii) Medium Term Notes having a tenor of 6 years and bearing interest at 2.00% p.a. (equal to 35% of the claim).  For the Medium Term Notes, all interest for the first 30 months will be paid in kind and thereafter in cash.  The remaining 10% of the claim value will be forfeited.

(3)  Option 3: If a Scheme Creditor elects to receive Option 3, 100% of the Scheme Creditor’s Claim will be exchanged into Long Term Notes.  These notes have a tenor of 8 years and bear an interest rate of 1.00% p.a.  All interest for the first 42 months will be paid in kind and thereafter in cash.

14.  Options 1 and 3 are subject to the “caps”, which if exceeded will trigger a pro-rata cut-back with the excess reallocated to Option 2.  Scheme Creditors who make no valid election by the Record Time will be allocated to Option 2.

Key Provisions of the Scheme

15.  The main features of the Scheme are set out below.

Scheme Effective Date

16.  The Scheme becomes effective on the Scheme Effective Date after the Court sanctions the Scheme and the Sanction Order is registered with the Registrar of Companies.  When the Scheme becomes effective, amongst other things:

(1)  Subject to certain carve outs, no Scheme Creditor can commence or continue any proceedings against any “Released Person” in respect of any “Claims” that are to be released under the Scheme.

(2)  The Scheme Creditors will authorise the Company and other relevant third parties to take actions which are necessary or reasonably appropriate to give effect to the Scheme.

17.  There is a gap between the Scheme Effective Date and the Restructuring Effective Date as time is needed for the determination of Scheme Claims, allocation of Options, and execution of a series of post-sanction steps to implement the Scheme: e.g. Re CIFI Holdings (Group) Co Ltd[4].

Restructuring Effective Date

18.  “Restructuring Effective Date” is the date when (i) the Company will distribute, and/or take certain specified steps to ensure that, the Scheme Consideration and Consent Fee (together, the Restructuring Consideration) are distributed to the Participating Creditors[5], (ii) the Existing Notes will be cancelled and the Existing Finance Documents will be terminated and discharged, (iii) the Deeds of Release will be executed by the Company for and on behalf of the Scheme Creditors, and (iv) all new documents necessary to implement the Restructuring will become effective.

19.  The Restructuring Consideration for those who have not submitted the requisite documentation before the Record Time will be placed in the Holding Period Trust and distributed or managed as per the Holding Period Trust Deed.

20.  The Restructuring Effective Date will only occur if the conditions set out in Clause 7.2 are met.  If the Restructuring Effective Date does not occur by the Longstop Date, the Scheme will lapse.

21.  The Longstop Date may be extended in two ways:

(1)  First, it may be extended with the consent of the Majority Scheme Creditors (Scheme, Clause 12.2); this is unobjectionable and has been accepted in cases like Re Shimao Group Holdings Ltd[6].

(2)  Second, the Longstop Date will automatically extend from 31 July 2026 to 31 October 2026 if (i) a Sanction Order is granted on or before 31 July 2026, and (ii) the Company has provided the Ad Hoc Group and the Bank Group with bank statements demonstrating sufficient funds to meet its cash payment obligations.

Released Claims

22.  As can be seen in the definitions of “Ancillary Claim”, “Restructuring Claim”, and “Released Person”, the Scheme will release certain claims held by the Scheme Creditors against various third parties, as is consistent with contemporary scheme practice.

23.  First, the Scheme will release the liabilities of the Existing Subsidiary Obligors, being guarantors and security providers of the Existing Debt, to prevent any potential ricochet claims from arising post Restructuring that could otherwise undermine the Scheme: see Re Sunac China Holdings Limited[7].

24.  Secondly, the Scheme will release the “Released Persons” (comprising, inter alia, the Group, the AHG, the Bank Group, and their respective Personnel, advisors and agents, and other service providers involved in the Restructuring) from “Restructuring Claims” arising out of the preparation, negotiation, sanction or implementation of the Scheme and the Restructuring Documents.  The releases are consistent with those in Re Sunac[8].

25.  The releases are subject to carve-outs, which are similar to those in Re Sunac[9]. The releases do not extend to liability for fraud, gross negligence, or wilful default (Clause 2.4(d)(ii)) or liability of advisors arising under their duty of care to their client (Clause 2.4(e)). There is also no general release for directors’ breaches of duty (Clause 2.4(b)).

Developments after the Convening Hearing

26.  Following the Convening Hearing, the Company updated the draft ES to (i) update the financial information disclosed therein, (ii) reflect material developments that had occurred since the hearing, and (iii) provide additional illustrative information on the economic effect of the Restructuring on the Company and the Group.

27.  Two specific changes, which were alluded to at the Convening Hearing, are worth highlighting:

(1)  First, following the publication of the Company’s 2025 Audited Financial Statements, the ES was updated to reflect the most current financial data:

(i)  Kroll prepared an updated comparison report titled “Comparison of Financial Position between 31 December 2024 and 31 December 2025” (“20251231 Comparison Report”), prepared on the basis of the Group’s consolidated audited financial statements as of 31 December 2025 in place of the previous comparison report that relied on the Group’s financial position as of 30 June 2025.

(ii)  Post-Restructuring pro forma balance sheets illustrating the estimated impact of the Restructuring on the balance sheet of the Group and the Company were prepared using audited figures as of 31 December 2025.

(2)  Secondly, the Existing 2023 Syndicated Loan was previously secured by an additional charge over a securities account of Happy Scene Global Limited (an indirectly held subsidiary of the Company) comprising 504 million shares in SCE Intelligent Commercial Management Holdings Limited.  Those shares were disposed of by a receiver by 8 May 2026, prior to the Record Time and the Scheme Meeting.  The Company duly notified the Chairperson and the Information Agent of this disposal at the material time, and the Chairperson is understood to have taken this development into account in assessing the Voting Scheme Claims.

Out-of-Scope Debt

28.  The debts and liabilities borrowed or guaranteed by the Company falling outside the Scheme represent 12.84% of the Company’s total existing liabilities as of 31 December 2025.  Such Out-of-Scope Debt are either not due, have been restructured or are in the process of being restructured.  These comprise:

(1)  Four private loans with a total outstanding principal of approximately US$196.74 million, in respect of which the Company is either borrower or guarantor.  These loans are secured by the Mainland law-governed pledges granted by onshore entities over investment properties or equity pledges over onshore and offshore subsidiaries.  They are excluded as their security is expected to afford full or substantial recovery, and their enforcement would not undermine the Restructuring.

(2)  One corporate bond and five secured onshore bank loans with a total outstanding principal of approximately US$137.74 million, in respect of which the Company is a guarantor.  These liabilities are excluded as they are governed by the Mainland law and involve onshore creditors who may be unable or unwilling to participate in the offshore Scheme.

29.  No lender has indicated any intention to take hostile action against the Company, and all have expressed a willingness to cooperate with it. No Scheme Creditor has objected to the exclusion of the above debts from the Scheme.

Analysis

30.  In considering whether a Scheme should be sanctioned, the Court taken into account the following factors[10]:

(1)  whether the scheme is for a permissible purpose;

(2)  whether creditors who were called on to vote as a single class had sufficiently similar legal rights that they could consult together with a view to their common interest at a single meeting;

(3)  whether the meeting was duly convened in accordance with the court’s directions;

(4)  whether creditors have been given sufficient information about the scheme to enable them to make an informed decision whether or not to support it;

(5)  whether the necessary statutory majorities have been obtained;

(6)  whether the court is satisfied in the exercise of its discretion that an intelligent and honest man acting in accordance with his interests as a member of the class within which he voted might reasonably approve the scheme; and

(7)  if the company which puts forward the scheme is a foreign company, whether there is sufficient connection between the scheme and Hong Kong, and the utility of the court sanctioning the scheme.

31.  The Company submits that each of the above factors is satisfied. I agree.

Permissible Purpose

32.  The Scheme seeks to restructure the debts of the Company; this is a permissible purpose of a scheme.

Class Composition

33.  The issue of whether the classes of creditors are properly constituted is to be determined as per the guidance in Re CIFI[11]. The key question is whether the new rights granted by the Scheme in place of the existing rights are so different that the Scheme must be treated as a compromise with more than one class.  I am satisfied that the Scheme Creditors are properly placed in one class.

34.  First, whilst there are differences in (i) the type of debt instruments, (ii) their interest rates (5.95%-7.375% for the Existing Notes and Hibor / SOFR + 3.7% + credit adjustment spread 0.114480% or Hibor / SOFR + 6.35% for the Existing Loans), (iii) their default interest rates (approximately 2% for the Existing Loans but none for the Existing Notes) and (iv) their maturity dates, these differences do not fracture the class.  The relevant comparator is that of an insolvent liquidation. In a liquidation scenario, the rights of all Scheme Creditors against the Company would be materially the same and their claims would rank pari passu: see Re Haya Holdco 2 Plc[12].

35.  Secondly, the Existing Notes and the Existing Loans benefit from the same package of guarantees granted by third parties and Share Charges granted by the Company and third parties[13].

36.  Thirdly, the rights of the Scheme Creditors under the Scheme are identical: each is entitled to choose from the same Options as Scheme Consideration.

37.  Fourthly, whilst the exclusion of default interest from the calculation of the Scheme Creditors’ entitlements only affects Existing Lenders (other Scheme Creditors are not entitled to default interest), the Recovery Analysis Report shows that the inclusion of default interest in the Scheme Creditors’ Claims would increase recovery for the Existing Lenders by only approximately 0.1%-0.5%[14]. Such a minimal difference would not render it impossible for Existing Lenders and Existing Noteholders to consult together in their common interest: see Re Sunac[15].

38.  Fifthly, 31 December 2024 (and not a more recent date) is used to calculate the Scheme Creditors’ entitlement under the Scheme.  I accept that this would not fracture the class:

(1)  The commercial terms in the Term Sheet were negotiated on the basis of claims as of that date, the cut-off applies equally to all Scheme Creditors, and each creditor’s proportionate share of the total Scheme Consideration does not vary materially whether 31 December 2024 or a later date is used.

(2)  The ES discloses with transparency the impact of the exclusion of the accrued interest after 31 December 2024 by setting out, for each Existing Debt Document, (i) the accrued interest up to the Interest Cut-Off Date of 31 December 2024; (ii) the accrued interest up to 31 December 2025 for comparison; and (iii) the accrued default interest (where applicable): c.f. e.g. Re aCommerce Group Limited[16].

(3)  Further, the Recovery Analysis Report concludes that the inclusion of interest accrued up to 31 December 2025 would reduce recovery for the Scheme Creditors by only approximately 0.1%-0.2%[17].

39.  Sixthly, Consent Fee, AHG Work Fee, AHG Advisor Fee and Bank Group’s Advisor Fee are payable by the Company, but this would not fracture the class of Scheme Creditors:

Consent Fee/RSA:

(1)  A modest consent fee available to all Scheme Creditors will not fracture the class, assessed by reference to the fee’s size relative to projected returns under the Scheme and in liquidation: see Re CIFI[18]. Here, all Scheme Creditors had equal opportunity to accede to the Amended RSA, and the additional recovery for those who are entitled to receive the Consent Fee (Early Consent Fee: 0.1% and Base Consent Fee: 0.0% (US$ 1,000 in the aggregate)) is de minimis compared to estimated Scheme recoveries of 14.6%-28.1% and liquidation recoveries of 2.3%-5.0% (representing the estimated recovery from the Company and the Existing Subsidiary Guarantors).

AHG Work Fee:

(2)  The purpose of the AHG Work Fee is to compensate the Ad Hoc Group for (i) the time and effort expended over two years in formulating the Scheme and (ii) assuming risks associated with negotiating the Restructuring, including the trading restrictions they assumed due to being in receipt of material non-public information.  These are considerations which the Court has accepted as legitimate justification for an AHG Work Fee: see Re CIFI[19].

(3)  Further, the total amount of the AHG Work Fee is US$8.71 million and would only lead to an additional recovery of approximately 0.44% for the Ad Hoc Group members[20]. This is immaterial when compared to the estimated returns under the Scheme and the liquidation scenario.

AHG Advisor Fee and Bank Group’s Advisor Fee:

(4)  The Company will pay an aggregate of US$6.2 million for the professional costs of the Ad Hoc Group’s and the Bank Group’s Advisors for their work in devising and formulating the terms and transaction structure of the Restructuring.  This has been fully disclosed.  Further, the estimated AHG Advisor Fee and the Bank Group’s Advisor Fee collectively represent only around 0.27% of the aggregate outstanding principal amount of the Existing Debt, and should not have any material bearing on the decision of the relevant creditor groups.

Compliance with the Court’s Directions

40.  I am satisfied that the Company has complied with the Convening Order.  On 27 April 2026, 21 days before the Scheme Meeting, the Notice of Scheme Meeting (in English, Traditional Chinese and Simplified Chinese) was dispatched via the following methods:

(1)  publication by the Information Agent on the Transaction Website;

(2)  publication by the Company by way of announcement on the HKExnews Website at https://www.hkexnews.hk;

(3)  uploading by the Company on its website at www.sce-re.com; and

(4)  distribution by the Information Agent via the clearing systems by giving instructions to Euroclear and Clearstream.

(5)  e-mailing by the Information Agent to each person who the Company believes is or may be a Scheme Creditor, and for whom the Company or the Information Agent has a valid e-mail address.

41.  The Notice of Scheme Meeting also contains a link to the Transaction Website to enable the Scheme Creditors to access copies of (i) the Scheme Document, (ii) the ES, (iii) other documents referred to in the ES, and (iv) advanced drafts of the templates of the transaction documents required to implement the Restructuring listed in Section 10.1 of the ES.

Sufficiency of Information

42.  I am also satisfied that sufficient explanation has been given in the ES:

(1)  Section 4 (Letter from the Board of Directors to the Scheme Creditors) provides a brief overview of the Scheme, summarises the Existing Debt to be compromised and the actions Scheme Creditors are required to take.

(2)  Section 5 (Background to the Group and the Restructuring) explains the debt composition of the Company and its subsidiaries, the circumstances leading up to the Scheme and the key terms of the Amended RSA, including the Consent Fee arrangements.

(3)  Section 6 (Overview of the Scheme) provides an overview of the Scheme, a comparison between the expected returns in a Scheme scenario and a liquidation scenario, and information concerning the costs and expenses relating to the Restructuring.

(4)  Section 7 (Implementing the Scheme and Effect of the Scheme) explains the steps for implementing the Scheme, the claims to be released, and the Disputed Claims Resolution Procedures.

(5)  Section 8 (Selection and Distribution of Scheme Consideration) explains in detail the three Options available for the Scheme Consideration and the selection and allocation mechanisms.

(6)  Section 9 (Summary of the New Debt Instruments) sets out the key terms of the New Debt Instruments to be issued under the Scheme.

(7)  Section 11 (Scheme Creditors and Actions to be Taken) explains who the Scheme Creditors are and the steps they are required to take in connection with the Scheme.

(8)  Section 12 (Details Regarding the Company, Directors and Senior Managers) sets out, inter alia, the interests of the directors in the Group and the Restructuring.

(9)  Section 13 (Risk Factors) highlights the key risks of this Scheme, including the risk that the Group may not generate sufficient cash to honour its obligations under the New Debt Instruments.

(10)  Appendix 3 (Recovery Analysis Report) contains an analysis prepared by Kroll on the estimated returns to the Scheme Creditors in a hypothetical liquidation scenario and the restructuring scenario.

(11)  Appendix 6 (Solicitation Packet) contains detailed instructions on what Scheme Creditors must do to vote and to receive the Scheme Consideration.

43.  The Recovery Analysis Report was prepared based on the Company’s and the Group’s audited financial results as at 31 December 2024.  To give the Scheme Creditors an updated assessment of the Company’s financial position and effect of the Restructuring, Scheme Creditors were provided with the:

(1)  20251231 Comparison Report (see [27(1)(i)] above), setting out a high-level comparison of the financial position of the Group as at 31 December 2024 and 31 December 2025.  Kroll concluded that the recovery available to the Scheme Creditors arising from a hypothetical liquidation as at 31 December 2025 will likely be lower than that in the Recovery Analysis Report made as at 31 December 2024.

(2)  Post-Restructuring pro forma balance sheets (see [27(1)(ii)] above), indicating the anticipated effect of the Restructuring on the balance sheet of the Group and the Company.

Statutory Majorities

44.  385 Scheme Creditors representing US$2,388,273,276 in value attended and cast valid votes in the Scheme Meeting.  Of those present and voting, 381 Scheme Creditors holding approximately US$2,103,728,104 in amount, i.e., 99.0% by number and 88.1% in value, voted in favour of the Scheme.  Thus, the statutory majorities are clearly met.

Discretionary Factors

45.  The Court is slow to differ from the view of the majority as it normally acts on the principle that businessmen are much better judges of what is to their commercial advantage than the Court: see Re CIFI[21]. Given that the average estimated returns under the Scheme (14.6%-28.1%[22]) are higher than that under a liquidation scenario (2.3%-5.0%, which are the estimated recoveries from the Company and the Existing Subsidiary Guarantors in liquidation), I accept that the Scheme is one which an intelligent and honest man might approve.

46.  Insofar as the conditions of the Scheme Effective Date are concerned, the only outstanding conditions are (i) the sanction of the Scheme by this Court, and (ii) the filing of a sealed copy of the order sanctioning the Scheme with the Registrar of Companies.  There should not be any impediments to the Scheme coming into effect other than the sanctioning itself.

47.  As to the status of the various conditions precedent to the Restructuring Effective Date (as set out in Clause 7.2 of the Scheme), this has been addressed in the 2^nd affirmation of Wong Chiu Yeung (“Wong 2^nd”).  The most important are the following:

(1)  Clause 7.2(b) requires the Company to obtain all relevant regulatory or shareholder approvals or necessary consents for the Restructuring to take effect.  In this regard:

(i)  The Company has obtained shareholder approval in relation to the issuance of the MCBs and 1966 Shares.

(ii)  The Company will submit a listing application for the New Notes and MCBs to the Singapore Exchange Securities Trading Limited shortly after the sanctioning of the Scheme.  The Company submits that it does not anticipate any difficulties in respect of this condition.

(iii)  As regards the condition of registering the New Debt Instruments with the National Development and Reform Commission (“NDRC”), the Company had made an initial filing with the NDRC shortly before the Sanction Hearing and, if the Scheme is sanctioned, it will supplement that filing with the sealed Sanction Order as soon as reasonably practicable after the Scheme Effective Date.

(iv)  As regards the condition of issuing the Company’s confirmation in an officer’s certificate that the Company is eligible to issue the new 1966 Shares and the MCBs pursuant to the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies of the Chinese Securities Regulatory Commission, the Company submits that it does not presently foresee any impediment in respect of this condition and expects to make the certificate available by the Restructuring Effective Date.

(2)  Clauses 7.2(d) and (j) require the Company to settle: (i) the Consent Fee and (ii) AHG Work Fee and the fees, costs, and expenses incurred in relation to the Restructuring.  In this regard:

(i)  These cash payments total approximately US$23.92 million[23].  As of 3 June 2026, the Group has settled US$10.18 million out of US$23.92 million (around 42.6%) of those costs.

(ii)  The Company anticipates that the remaining US$13.74 million will be met from the cash and cash equivalents held by the Group.  As of 3 June 2026, the Group held approximately US$16.97 million offshore, which is sufficient to cover the remaining fees under Clauses 7.2(d) and (j) of US$13.74 million in their entirety.

48.  Whilst not a Restructuring Condition, the Company will also be required to pay an estimated US$5.60 million on the Restructuring Effective Date (subject to final determination by the Scheme Administrator), representing the cash component of the Option 1 Scheme Consideration payable pursuant to Clause 9.3(c)(ii) of the Scheme.

49.  The Group is currently in the process of arranging the remainder of the amounts payable by remitting money from its onshore to offshore bank accounts, including by way of remittances and refinancing of other offshore investments and receivables.  The risk associated with limitations on timely remittance is expressly identified as a risk factor in Section 13.2(k) of the ES.

International Jurisdiction / Utility

50.  Although the Company is an offshore company, the Court can exercise its jurisdiction to sanction the Scheme since the Company is listed in Hong Kong, some of its creditors are in Hong Kong, and some of the debts to be compromised under the Scheme are governed by Hong Kong law.  There is therefore a sufficient connection between the Scheme and Hong Kong: see Re CIFI[24].

Conclusion

51.  For the above reasons I made an order on 16 June 2026 sanctioning the Scheme.