Re Hong Kong Pharmaceutical Holdings Ltd

CourtHigh Court (Hong Kong)
Judgment Date21 November 2006
Judgement NumberHCCW1018/2004
Subject MatterCompanies Winding-up Proceedings
HCMP002317/2006 RE HONG KONG PHARMACEUTICAL HOLDINGS LTD

HCMP 2317/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2317 OF 2006

____________

  IN THE MATTER of Hong Kong Pharmaceutical Holdings Limited
  and
  IN THE MATTER of Section 166 of the Companies Ordinance, Chapter 32

____________

AND

HCCW 1018/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 1018 OF 2004

____________

  IN THE MATTER of Hong Kong Pharmaceutical Holdings Limited
  and
  IN THE MATTER of Section 166 of the Companies Ordinance, Chapter 32

____________

(Heard Together)

Before: Hon Kwan J in Court

Date of Hearing: 21 November 2006

Date of Judgment: 21 November 2006

Date of Handing Down of Reasons for Judgment: 21 November 2006

__________________________________

REASONS FOR JUDGMENT

__________________________________

1. Hong Kong Pharmaceutical Holdings Limited (“the Company”), acting by its provisional liquidators, presented a petition on 20 November 2006 for sanction of a scheme of arrangement with its creditors under section 166 of the Companies Ordinance, Cap. 32. As one of the conditions precedent to completion of the transactions contemplated in the scheme is the withdrawal of the winding-up petition against the Company in HCCW No. 1018 of 2004 and the discharge of the provisional liquidators, the summons issued by the petitioning creditor Goldon Investment Limited and a supporting creditor Umbrella Finance Company Limited (“Umbrella Finance”) seeking leave to withdraw the winding-up petition and other consequential directions was heard at the same time as the petition for sanction of the scheme of arrangement. At the conclusion of the hearing, I sanctioned the scheme and gave leave to withdraw the winding-up petition. These are the reasons for judgment.

2. The Company was incorporated in Bermuda and registered in Hong Kong under Part XI of Cap. 32 as an oversea company on 23 September 1997. Until 3 October 2001, it was registered under the name of Nam Pei Hong International Holdings Limited. The Company functioned as an investment holding company. Its shares have been listed for trading on the Main Board of The Stock Exchange of Hong Kong Limited. Trading in its shares has been suspended since 5 August 2004.

3. Provisional liquidators were appointed for the Company on 13 October 2004 on the application of Umbrella Finance. After conducting a review of the Company’s business, the provisional liquidators came to the view that one of the ways to maximise recoveries for the creditors was by a restructuring which realizes value from the listed status of the Company’s shares and its business of wholesale and retail sale of traditional Chinese medicines, other medicines, health products and dried seafood which is primarily operated under the name of Nam Pei Hong Sum Yung Drugs Company Limited (“Nam Pei Hong”), an indirect wholly owned subsidiary of the Company.

4. On 7 September 2005, a restructuring agreement was entered into between, inter alia, the Company and the investor, Gain Alpha Finance Limited (“the Investor”), giving effect to the restructuring proposal. By the proposal, the Investor is to acquire a controlling interest in the Company from the issue and allotment of new shares, in consideration of which the Investor will pay cash of HK$80.19 million, of which HK$45.5 million is to be distributed in accordance with the scheme and the balance of HK$34.69 million is to be provided as working capital...

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