New Judgment – Re Logan Group Company Limited [2026] CIGC (FSD) 47 (convening hearing)

On 28 May 2026 the Grand Court of the Cayman Islands (Doyle J) made an order convening a single meeting of creditors to consider a scheme of arrangement under section 86 of the Companies Act (2026 Revision) proposed by Logan Group Company Limited, and delivered an ex tempore judgment giving reasons. The judgment was delivered the same afternoon so that it would be available to the Hong Kong court at the convening hearing of the parallel Hong Kong scheme.

Background

The Company is the Cayman-incorporated, Hong Kong-listed parent of a PRC property development group. It has been in default on its offshore financial indebtedness since August 2022 and had received statutory demands, court notices and demand letters from creditors with claims of approximately US$5.09 billion. Two money judgments had been entered against it in Hong Kong. The scheme creditors comprise the holders of twelve series of debt securities, lenders under loans borrowed by the Company or guaranteed by it, and certain service providers, with claims of approximately US$11.9 billion in principal. The Company is primary or secondary obligor on all of that debt. Some of the debt is also secured on assets of group companies which are not co-obligors under the scheme (the ‘Excluded Collateral’).

The scheme releases the Company and its co-obligors from the scheme debt in exchange for a choice of five options: cash at 15% of entitlement (capped), two forms of asset-backed instruments and mandatory convertible bonds. Each creditor’s ‘Distribution Entitlement Amount’ is the principal amount of its claim less the assessed value of any Excluded Collateral securing it, with a two-stage adjudication mechanism for disputes. Accrued interest is not counted for distribution save that 30% of accrued ordinary interest to 31 December 2024 is taken into account under two of the options. Default interest is disregarded throughout. Existing shareholders retain at least 42% of the equity on a fully diluted basis through a redirection of part of the mandatory convertible bonds. FTI Consulting’s liquidation analysis estimated recoveries from the Company of 2.95% to 4.04% and from the co-obligors of 0% to 2.43%, against estimated scheme recoveries of 11.4% to 42% depending on option.

Notice was given by practice statement letter on 7 May 2026, 21 days before the hearing. Two creditors had raised concerns in correspondence: Luso International Bank Limited, which disputes its status as a creditor in proceedings in Macau, and China CITIC Bank International Limited, which wrote two days before the hearing raising class composition and treatment points. Neither appeared.

The judgment

Doyle J held:

• Twenty-one days’ notice was sufficient, applying Re Petrofac Ltd [2025] EWHC 859 (Ch) at [20] and Re E-House (China) Enterprise Holdings Ltd (Segal J, 17 November 2022) at [58].
• The Court had jurisdiction. ‘Arrangement’ is construed broadly and requires only give and take (Re Lehman Brothers International (Europe) [2019] BCC 115, Hildyard J); it may include the release of creditors’ rights against third parties (Re T&N Ltd [2007] Bus LR 1411 at [53]).
• There were no obvious roadblocks. The partial retention of equity by the existing shareholders was not one. The order would have substantial effect and there was nothing to suggest the scheme would lack international effectiveness where necessary.
• A single class was appropriate. All scheme creditors hold unsecured claims ranking pari passu in the comparator liquidation, and all are offered the same elections allocated on the same basis. Differences in quantum, maturity and interest rate are irrelevant to class (Re ED&F Man Treasury Management plc [2020] EWHC 2290 (Ch) at [11]–[12]). The treatment of accrued interest, which counts for voting but is largely disregarded for distribution, was not a ground for fracturing the class. Rights against third-party obligors and the Excluded Collateral are interests, not rights (Re Gategroup Guarantee Ltd [2021] BCC 549 at [183]; Re Ocean Rig UDW Inc [2017] 2 CILR 495 at [67]; Re UDL Holdings Ltd [2002] 1 HKC 172). There was ‘more to unite than to divide’ the creditors, whose basic choice was between liquidation and rescue.
• An early bird fee of 0.125% of principal came nowhere near fracturing the class (Re PGS ASA [2020] EWHC 3622 (Ch) at [53]; Ocean Rig at [69]). Work fees already paid to the ad hoc group of noteholders were unconditional and irrelevant to class. A further work fee of 1.4% of the principal of the notes held by the group, payable on sanction, was ‘well within the conventional range’ (Re Haya Holdco 2 plc [2022] EWHC 1079 (Ch) at [72(6)]; Re China Aoyuan Group Ltd, 31 October and 7 December 2023). The Company’s agreement to pay the group’s professional fees did not fracture the class.
• Luso Bank’s disputed status raised no class issue. Disputed creditors can be the subject of a scheme, and the scheme would not affect the Macau proceedings in which Luso Bank disputed its status as a creditor.

Adam Al-Attar KC and Ryan Perkins appeared for the Company, instructed by Campbells (Hamid Khanbhai, Jordie Feinberg (Cayman Islands,) and Jane Hale (Hong Kong)) and White & Case (Sophie Lyall, Anthony Chan and Li Yesheng (Hong Kong)).

Read the full judgment here