The recent case of In re China Agrotech Holdings Limited showcases the agility of the Courts in the Cayman Islands and Hong Kong in dealing with restructuring matters.
The terms of the restructuring in this case, with the ultimate aim of re-listing the Company, comprised a capital reduction, parallel schemes of arrangement, share subscription and public offering, all of which had to be completed in an extraordinarily tight timescale. A shareholder challenge placed this in jeopardy. Failing to achieve any of these components meant the failure of a restructuring five years in the making. The Company and its liquidators needed to be nimble.
Urgent hearings and decisions in both jurisdictions, including considerations of conflict of laws, ensued because:
- The Company’s public offering would lapse (and the restructuring would fail) if the shareholder challenge was not successfully disposed of, including the expiration of the time for any appeal, by 25 July 2019. An order on the shareholder challenge was thus needed by 9 July.
- The capital reduction confirmation was required by 16 July to enable sufficient time for the capital reduction to become effective in time for the allotment of new shares.
- Court sanction for the schemes was needed by 23 July to enable sufficient time to effect the re-listing on 26 July 2019.
In the Cayman Islands Justice Segal, noted the unusual circumstances of the case affecting not just the parties but also the Company’s other shareholders, creditors and stakeholders on a contested summons issued on 12 June, heard the shareholder dispute on 5 July, made an order on 9 July and delivered a detailed judgment on 16 July. He then presided over an urgent hearing to deal with the need for the capital reduction confirmation by 16 July. In Hong Kong, with Mr. Justice Harris having to recuse himself in an unusual twist to the case, swift collaboration saw Deputy Judge Mr. William Wong SC stepping in to preside over a contested sanction hearing and deliver an immediate judgment, enabling the Hong Kong timetable to be met. The case also benefited from Mr. Justice Harris’s cross jurisdictional communication with Justice Segal to assist in the disposal of matters.
The approach of the Courts in the Cayman Islands and in Hong Kong demonstrates they are market leaders and jurisdictions of choice in the global restructuring arena.
Harneys acted for the Company and its liquidators.The team was led by partners Ian Mann and Chai Ridgers in Hong Kong and the team comprised Jayson Wood, Paul Madden and Lachlan Greig in the Cayman Islands and Lorinda Peasland and Charles Wong in Hong Kong.
Watch out for Blog 3 – “A Shareholders Challenge” coming soon.