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HSBC has won a legal victory in its attempts to claw back losses from a US$190mn facility it provided to since-bankrupt Hong Kong commodity trader NewOcean Energy.

A British Virgin Islands (BVI) court granted HSBC’s application to wind up two companies which provided guarantees for the facility, which was extended in 2019 with the UK-headquartered lender acting as mandated lead arranger.

The judgment was made in late July but only published on September 16.

NewOcean Energy Holdings Ltd, primarily an oil, gas and electronics trader, was placed into the hands of liquidators at the end of 2022 after racking up large losses during the Covid-19 pandemic, according to previous regulatory filings and court documents. Its shares were de-listed from the Hong Kong stock exchange last year.

At the time of the liquidation, NewOcean owed US$770mn to its bank creditors, according to a separate court judgment in Bermuda. The unpaid debt to HSBC, on behalf of a consortium of lenders which are not named in the judgments, was US$171mn.

HSBC asked the BVI court in April last year to place the guarantor companies – two BVI entities that are also part of the sprawling NewOcean group – into a liquidation process run by FTI Consulting, which is also liquidating the NewOcean parent company.

HSBC told the court that during 2021 and 2022, a series of transactions were carried out within the NewOcean group which Judge Gerhard Wallbank said appeared to have insulated the remaining assets from HSBC and other lenders.

HSBC argued that “the series of transactions (asset disposals, share transfers, pledges and mortgages) relating to these assets and the group companies which owned them … have wholly frustrated the efforts of liquidators… to recover the sums owed to HSBC by the borrower”.

The two guarantor companies fought the liquidation attempt, arguing that they no longer owed any debt to HSBC because the bank had not proved it had submitted its statutory demand to the companies in May 2021, nor sought permission from other lenders beforehand.

But the court sided with HSBC, finding the evidence that the demand was served by mail, fax and email was “overwhelming” and that it “is utterly incredible” for the guarantors to argue otherwise.

Wallbank described the guarantors’ arguments as “opportunistic snatching at straws, and of brain-storming afterthoughts, in an effort to thwart a winding up order”.

The guarantors also argued they should not be wound up because their liability had the nature of a guarantee, rather than an indemnity, and because HSBC had injured NewOcean by influencing the liquidators.

But the judge ruled the argument that HSBC harmed NewOcean was “legally and factually unsupported”.

NewOcean owed money to 24 banks as of early 2022, according to a Bermuda court judgment of the same year, which also shows Rabobank and Standard Chartered were among the creditors.

In 2021 and 2022 the bank creditors, led by HSBC, repeatedly fought to have the trader liquidated, but were blocked by a court in Bermuda until the decision was overturned on appeal at the end of 2022.

As of 2022, NewOcean owned assets including energy storage terminals, refuelling stations and a property complex in the Chinese city of Zhuhai, the 2022 Bermuda judgment says. An original asset disposal plan valued the combined assets at US$552mn.

A spokesperson for HSBC did not respond to a request for comment. The chambers of Matthew Hardwick KC, the barrister representing HSBC, described the judgment as “an emphatic win for HSBC”.

As of press time, the guarantors had not responded to a request for comment sent through the chambers of their barrister, David Mohyuddin.