The conference room was packed with dozens of angry creditors representing Asia’s biggest banks. They wanted to know what had happened to a $650m loan, extended in March 2014 to China Fishery Group and related companies, as concerns grew that they would never be repaid.
It was December 2015, and the creditors ranged from HSBC and Standard Chartered to Maybank, Malaysia’s largest financial services group. They had summoned Ng Joo Siang, the then chief executive of China Fishery, a Hong Kong-based, family-controlled operation, to explain why the company had stopped complying with the terms of the debt secured to refinance the 2013 purchase of a Peruvian fisheries business. Within minutes Mr Ng was heard shouting at the assembled audience as they grilled him on what happened to their money, according to three people present.
Two years on from that clash at the Maybank offices on the 18th floor of Hong Kong’s Citic Tower, the creditors are still waiting.
The wrangling has since shifted to New York, where the company filed for Chapter 11 bankruptcy protection in June 2016, to the surprise of its creditors in Hong Kong. In a US court filing, some of those creditors raised concerns regarding the Ng family over questionable transactions totalling more than $1bn and suspicions of substantial overstatements of revenues and receivables/prepayments made by the group. They asked the court to appoint a trustee, William Brandt, who is shuttling between South America, New York, Singapore and Hong Kong trying to sell assets including the Peruvian business.
A separate investigation into the group’s finances, by FTI, the consultants, raised questions about the ultimate destination of some of the money the creditors lent. Mr Brandt is investigating this aspect of the case, according to court documents. Meanwhile, the Ngs and at least one of the lawyers who represent the family, Bertie Mehigan of the Mehigan law firm in Hong Kong, strongly deny that the family has done anything wrong.
The banks declined to comment about the China Fishery loan deal. They have sold much of their debt to hedge funds on both sides of the Pacific in recent months. But the case has triggered questions over whether, despite the extra safeguards regulators introduced after the financial crisis, enough due diligence is being carried out in some cases by banks before they lend to corporate clients.
It [has turned into] a massive blame game, says a lawyer acting for some bondholders. Why did someone not say at the time: Where did it start? How did we miss it?’
The Ng family sits at the top of a relatively straightforward industrial fishing business. Launched in the late 1980s China Fishery ships trawl the oceans from off the coast of Chile to the cold waters around Vladivostok. Its factories most are in China but it has one floating facility turn the catch into fishmeal, and frozen fish fingers.
The family does not dispute that the company violated the terms of the agreements but says it tried to explain that much of China Fishery’s problems stemmed from the impact of El Niño, the ocean weather system, between 2013 and 2015.
THE FINANCIAL TIMES LTD 2018