A new chapter: Sino-Ocean Group's USD5.5 billion landmark financial restructuring

This transaction, which involved a restructuring plan under Part 26A of the Companies Act 2006 and a parallel Hong Kong scheme of arrangement, marks a significant milestone in the real estate sector.

The two largest shareholders of the Group are China Life Insurance Company Limited and Dajia Life Insurance Co., Ltd., two state-owned enterprises each holding approximately 30% of the issued share capital of Sino-Ocean.

In September 2023, in response to the challenges faced by the Group with regard to its liquidity and funding in its real estate development business, the Group announced the suspension of payment of its offshore debt pending the formulation and implementation of a holistic restructuring of its offshore debt (the Restructuring). The CoCom was formed to coordinate the Restructuring among the bank lenders and the Group, with the support of A&O Shearman as legal advisers.

The negotiation and coordination led to the implementation of the Restructuring by way of a restructuring plan under Part 26A of the UK Companies Act 2006 (the English Restructuring Plan) and an inter-conditional scheme of arrangement under the Hong Kong Companies Ordinance (the Hong Kong Scheme). Despite the Restructuring being challenged in court by a bondholder, both the English Restructuring Plan and the Hong Kong Scheme have now been sanctioned by the High Court of England and Wales and the High Court of Hong Kong.

Viola Jing, A&O Shearman partner, commented: “This is the first English restructuring plan involving a cramming class that is comprised of only foreign law-governed debt (Hong Kong law), with a parallel process being run in Hong Kong to give effect to the restructuring under the plan. In addition to English law and Hong Kong law, the restructuring involved matters of law in a number of other jurisdictions including the U.S. This ground breaking and precedent-setting restructuring is a collaborative effort between the Group (and its advisers) and the CoCom (and its advisers).

Viola added: “It showcases the effectiveness of A&O Shearman’s global network of restructuring experts, our ability to provide seamless single firm advice across all major jurisdictions, and the value-add of the online project management portal offered by our advanced delivery and solutions team. This is an offering that very few law firms can match.”

The core A&O Shearman team was led by Hong Kong-based partner Viola Jing with support from members of both the Hong Kong and London restructuring teams, including Nick Charlwood (partner, London), Leona Healey (registered foreign lawyer, Hong Kong), Jack Kwan (associate, Hong Kong), Sonia Bennett (associate, London), and Tomson Pong (paralegal, Hong Kong). Other members of the A&O Shearman network who provided support include Agnes Tsang (partner, Hong Kong), Cindy Lo (partner, Hong Kong), James Yao (partner, Hong Kong), Jonathan Hsui (partner, Hong Kong), Matt Bower (partner, Hong Kong), Michael Chernick (partner, New York), Kylie Wong (Peerpoint legal consultant, Hong Kong), Livia Talenti (consulting lawyer, New York), Antonia Ma (senior associate, Hong Kong), Fion Lo (senior associate, Hong Kong), and Jeffrey Huang (senior associate, Hong Kong).