DLA Piper advises FTI Consulting in successfully resisting of receivership challenge and sale of Scholz Group

Global law firm DLA Piper advised appoint-takers in FTI Consulting in their capacity as joint receivers and managers over the shares of the Scholz Group’s holding companies in relation to Hong Kong court proceedings. The proceedings were brought by a borrower in default of a USD300 million syndicated term loan facility. The facility was secured by share charges over the entire issued share capital of various wholly owned subsidiaries incorporated in Hong Kong and the British Virgin Islands.

Pursuant to the security arrangements, receivers and managers were appointed over the charged shares. The borrower subsequently challenged the validity of those appointments and actions taken by the receivers, among other things.

The counsel involved resisting the receivership challenge while simultaneously supporting the cross-border sale of the Scholz Group to Derichebourg. The borrower subsequently discontinued the proceedings against the receivers.

The cross-border nature and the potential implications for Hong Kong’s receivership regime highlights the significance of this matter. Challenges to the validity of a receiver’s appointment are relatively uncommon in Hong Kong, and the proceedings unfolded alongside the sale of an international industrial group.

The DLA Piper Hong Kong Litigation and Regulatory team was led by Harris Chan, Partner and Litigation and Regulatory Lead in Hong Kong, supported by Sandy Au (Of Counsel), Matthew Tam (Senior Associate) and Titus Cheung (Associate). The team worked closely with colleagues from the firm’s Hong Kong Finance practice, including Trinh Hoang (Partner) and Tracy Wong (Senior Associate), and from its German office, including Dr Christoph Dachner (Partner) and Dr Lukas Reitebuch (Associate).

Harris Chan said: “This matter required the team to navigate complex enforcement and litigation issues across multiple jurisdictions while supporting the receivers in fulfilling their duties. We are pleased to have assisted FTI Consulting in securing an outcome favourable to all parties and completing a significant cross-border transaction notwithstanding the challenges presented by the proceedings.”