Authored by Mark Chan and Gerald Chen.
In a landmark High Court decision, Sino-Ocean Group Holding Limited (Sino-Ocean) and its subsidiaries (the Group), has become the first Chinese real estate developer to successfully implement a dual-track restructuring plan through parallel proceedings in the English and Hong Kong courts.
Background
The Group had offshore debt of approximately US$6 billion, governed by a mix of English and Hong Kong law. Amid a sector-wide downturn, the Group eventually defaulted, and a winding-up petition was presented.
To avoid liquidation, it was proposed that the Group's debt be compromised as part of a UK restructuring plan under Part 26A of the Companies Act 2006, in conjunction with a Hong Kong scheme of arrangement. Both plans were sanctioned in early 2025, setting a significant precedent in cross-border insolvency resolution.
Key features
The Hong Kong scheme addressed loans governed by Hong Kong law, while the English plan focused on bonds governed by English law, ensuring that both were effective for their respective debts.
The plan allowed existing Chinese state-owned shareholders to retain majority control without injecting new capital, recognising their role in preserving Sino-Ocean’s status to benefit creditors as a whole.
This was also the first restructuring plan where one pari passu creditor class crammed down another. The departure from equal treatment was accepted as all classes (except subordinated Class D) were unsecured, in-the-money creditors. The differing recovery rates reflected the expected returns in a liquidation, given variations in co-obligors across debt instruments.
Key takeaways
- Dual-track cross-border restructuring is a viable and effective strategy for international companies with complex debt structures.
- Courts in major jurisdictions are more willing to adopt a commercially sensible approach to benefit the company and its creditors, even if it means overriding certain creditor objections.
Re Sino-Ocean Land (Hong Kong) Ltd [2025] HKCFI 1270
Re Sino-Ocean Group Holding Ltd [2025] EWHC 205 (Ch)
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.
