RE WAH LEE RESOURCES HOLDINGS LTD.

HCMP 5671/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 5671 OF 2001

____________

____________

_______________

J U D G M E N T

_______________

1. This is a petition for court sanction under Section 166 of the Companies Ordinance in respect of a Scheme of Arrangement between Wah Lee Resources Holdings Ltd and its creditors.

2. I do not propose to set out in details the terms of the Scheme. Suffice to say that I am satisfied that it has been clearly and sufficiently explained in the Explanatory Statement dated 7 November 2001 which were sent to the creditors.

3. I gave directions on 6 November 2001 for creditors' meeting to be held. Subject to two aspects with regard to notice, the meeting was duly held on 28 November 2001. It was attended by all the creditors except 3. Those who did not attend were, Jiang Suk Yu Wendy, Yeung Ming Kwong and Linzhou Wuling Holding Limited [Linzhou]. Whilst the claim of Linzhou was not insubstantial (according to App. 1 to the Scheme, it was $2,651,853), the claims of the other 2 non-attending creditors were less significant.

4. Given Linzhou's role in the dissipation of funds of the company, I would not attach much significance to its absence. Even if it were to vote against the Scheme, I would not attach much weight to it as it might have some extraneous interest to serve other than considering the Scheme on its own commercial merits.

5. The result of the meeting was recorded in the report of the chairman of the meeting and the Scrutineer's Certificate. In terms of percentage of scheme creditors present, 97% voted in favour of the Scheme. In terms of value, 99.9% voted in favour. The requirement of Section 166(2) was therefore satisfied.

6. The non-compliance as to notice of the meeting was a minor one. Instead of giving 21 clear days' notice, only 20 days' notice was given. I am satisfied that I do have the power to waive such non-compliance (see Re Anglo Spanish Tartar Refineries [1924] WN 222; Re Kansa General International Insurance [1999] 1 HKC 255; Re Sharp Brave Co Ltd [1999] 4 HKC 79). Given the nature of the infraction, the level of attendance at the meeting, the adequacy of the notice albeit it was one day short, I am satisfied that the meeting has been in substance summonsed in the manner prescribed. I therefore waive the technical non-compliance with my directions as to 21 clear days' notice. I held that the meeting of 28 November 2001 was validly held.

7. Under the Scheme, the creditors would get a better return by way of dividends as compared with what would happen if the company is wound up. I was told that it is likely that all the condition precedents under the Restructing Agreement dated 2 August 2001 would be satisfied and the relevant approval by the SFC and SEHK are forthcoming. There was one creditor who voted against the scheme at the meeting of 28 November 2001. He did not turn up at today's hearing although he had been notified by the Provisional Liquidator.

8. In the circumstances, I am satisfied that the meeting of 28 November 2001 has no problem in terms of classification of creditors as all of them were unsecured creditors. Applying the test laid down in the recent Court of Final Appeal decision in Re: UDL Argos Engineering, FACV 11 of 2001, there was no need for separate meetings to be held for financial and non-financial creditors.

9. The scheme does not involve any element of reduction of capital or transfer of assets or undertaking. There is no Section 167 implications. On the whole, I am satisfied that this is a scheme which an intelligent and honest man as a member of the creditors concerned in acting in respect of his interest might reasonably approve of. I therefore exercise my discretion to sanction the Scheme.