In two remarkably similar cases, Re Peking University Founder Group Company Limited [2023] HKCFI 1350 (the “Peking University Case”) and Re Tsinghua Unigroup Co., Ltd [2023] HKCFI 1572 (the “Tsinghua Case”), the Hong Kong Court affirmed the enforceability of keepwell deeds entered into by PRC companies as credit enhancement for bonds issued by their respective offshore subsidiaries. The Court recognised that although keepwell deeds are not guarantees, they are still enforceable contractual obligations that provide additional security to bondholders. However, both cases illustrate that keepwell deeds are sensitive to supervening events and subject to approval from relevant PRC authorities, particularly where the keepwell provider enters into reorganisation proceedings in the PRC.
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“NOTES HOLDERS” WITH INDIRECT BENEFICIAL INTEREST HAVE NO STANDING TO WIND UP ISSUER COMPANY
In Re Leading Holdings Group Limited [2023] HKCFI 1770, the Hong Kong Court has made it clear for the first time that, based on a construction of the contractual documentation, investors with an indirect participation in notes issued by a company have no standing to petition for winding up of the issuer, despite their obvious commercial interest in the credit of the issuer. Continue reading