The Scheme of Arrangement process can be somewhat cumbersome and expensive. However, in the absence of a formal rescue procedure, in practical terms it is the only tool currently available to facilitate the rescue of distressed companies.
In this section we will look at the background to the use of Schemes in Hong Kong, the [...]

Why we use Schemes in Hong Kong to Rescue Distressed Companies
In Hong Kong, there is no formal process which provides a moratorium to protect a financially distressed company against its creditors whilst efforts are made to restructure it.
Attempts have been [...]

This is often called a Composite Document
It will set out the background to the company’s affairs explaining the reasons for the difficulties faced by the company. It will contain statutory information relating to the company, its accounting history, but more [...]

At the respective meetings, it is necessary for a majority of 75% in value and 50% in number to approve the proposed scheme. It is important to appreciate that this majority must be achieved at the meeting of every class of creditors and shareholders which is held.
Classes
The issue of classes has been dealt [...]

Assuming that the necessary majorities are achieved at the respective meetings of the different classes of creditors and shareholders. It is then necessary for the chairman of the meeting to report to the court on the outcome of the various meetings. A further hearing, known as the Sanction Hearing, is then held, at which the [...]