In Re China SCE Group Holdings Limited (中駿集團控股有限公司) [2026] HKCFI 4824, Harris J sanctioned a scheme of arrangement restructuring approximately US$2.27 billion of offshore debt owed by China SCE Group Holdings Limited (“Company”), a Hong Kong-listed Mainland property developer.
The Company had faced liquidity difficulties since the downturn in the Mainland real estate market began in mid-2021. Its default under a syndicated loan triggered cross-defaults on other debts, with its offshore principal defaults reaching approximately RMB17.45 billion by June 2025.
Under the Scheme, creditors could select from three restructuring options comprising different combinations of cash, new notes, mandatory convertible bonds and shares. Assuming full subscription of Options 1 and 3 and full conversion of the mandatory convertible bonds, the Scheme would reduce the Company’s liabilities by approximately US$1.7 billion, or 33.2%.
The Scheme received overwhelming creditor support: 381 out of 385 Scheme Creditors representing approximately 88.1% in value of those present and voting voted in favour of the Scheme.
Key Takeaways
- Different debt instruments, one class: Differences between the existing notes and syndicated loans – including their interest rates, default-interest entitlements and maturity dates – did not fracture the class. Applying the comparator of an insolvent liquidation, the claims of all Scheme Creditors would rank pari passu.
- Consent fees: The consent fee did not fracture the class because all Scheme Creditors had an equal opportunity to accede to the restructuring support agreement, and the additional recovery was de minimis compared to estimated Scheme recoveries and liquidation recoveries.
- Interest Cut-Off Date: Calculating claims as of 31 December 2024 rather than a more recent date would not fracture the class where the commercial terms were negotiated on that basis, applied equally to all creditors, fully disclosed in the Explanatory Statement, and caused only an immaterial difference (0.1%-0.2%) in recovery.
- International Jurisdiction: Although incorporated in the Cayman Islands, the Company had sufficient connection to Hong Kong by reason of its HKEX listing, the presence of local creditors, and the fact that some of the debts to be compromised were governed by Hong Kong law.
Mr Terrence Tai and Ms Stephy Lo, instructed by Sidley Austin, for the Company.
Read the judgment here at: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=184267&currpage=T
