Re Edward Simon Middleton and Others
Read the full judgment text of HCMP 2099/2021 on BabelCite. This High Court CFI judgment was delivered on 20 January 2022.
1. I have before me the second application for issue by this court of a letter of request directed to the Shenzhen
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HCMP 2099/2021 [2022] HKCFI 248 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 2099 OF 2021 ________________________
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________________________ Before: Hon Harris J in Chambers Date of Hearing: 14 January 2022 Date of Decision: 20 January 2022 ________________________ D E C I S I O N ________________________ Introduction 1.I have before me the second application for issue by this court of a letter of request directed to the Shenzhen Intermediate People’s Court seeking its assistance in aid of a Company’s liquidation and liquidators. The application is made pursuant to what is now commonly referred to as the “Cooperation Mechanism” that was entered into on 14 May 2021 by the Supreme People’s Court and Hong Kong’s Secretary for Justice. The first application was made on 20 July 2021. It concerned Samson Paper Co Ltd[1]. It is not necessary for me to repeat the explanation contained in that decision of the genesis and purpose of the Cooperation Mechanism and its terms. For present purposes what is relevant are (1) that the Cooperation Mechanism applies as between the Hong Kong High Court and the Shenzhen Intermediate People’s Court and (2) the criteria that need to be satisfied before the Shenzhen Intermediate People’s Court will recognise the Liquidators and grant them assistance. Background 2.The Company was incorporated in Hong Kong on 11 October 2007. The Company is part of a corporate group (“Group”). For more than 14 years, the Group has been engaged in the generation and supply of hydropower in the Mainland. The Group’s principal operating subsidiaries are in the Mainland. Key aspects of the Group’s corporate structure are as follows:
3.As explained below, beginning early 2021, certain shareholders and creditors of the Group began proceedings against each of the Parent and the Company. In addition, certain shareholders commenced arbitration proceedings against each of the Parent, the Intermediate Parent and the Company in Hong Kong. 4.On 28 May 2021, a shareholder of the Parent petitioned the Eastern Caribbean Supreme Court in the High Court of Justice British Virgin Islands (“BVI Court”) for the winding up of the Parent and applied ex parte for the appointment of joint provisional liquidators over the Parent on the grounds of serious misconduct engaged by the management of the Group in dealing with the Group’s affairs, which includes purported dubious related party transactions within and outside of the Group. 5.On 1 June 2021, the BVI Court ordered the appointment of Wesley Edwards, Wing Sze Tiffany Wong and Edward Middleton as the joint provisional liquidators (“JPLs”) over the Parent. 6.The JPLs recognised that in order to protect the interests of creditors and shareholders of the Parent, it was necessary for them to take control of the Intermediate Parent. On 17 June 2021, Ms Wong and Mr Middleton together with two colleagues in Alvarez & Marsal were appointed as directors of the Intermediate Parent. On 22 June 2021, following the reconstitution of the board of directors (“Board”) of the Intermediate Parent, the JPLs issued a notice to the Board of the Intermediate Parent requiring it to convene an extraordinary general meeting to pass a special resolution that the Intermediate Parent be voluntarily wound up, among other things. On 28 June 2021, the Intermediate Parent issued the notice of extraordinary general meeting to its members. On 14 July 2021, this shareholder meeting was held and the special resolution was passed. On 27 September 2021, the Grand Court of the Cayman Islands ordered the appointment of Christopher Kennedy, Ms Wong and Mr Middleton as the Joint Official Liquidators of the Intermediate Parent. 7.On 19 January 2021, a creditor (being one of the banks of a consortium) of the Company petitioned this Court for the winding up of the Company. On 17 May 2021, this Court ordered that the Company be wound up on the ground that it was unable to pay its debts. On the same day, Mr Osman Mohammed Arab and Mr Wong Kwok Keung, both of RSM Corporate Advisory (Hong Kong) Limited (“RSM”) were appointed by the Official Receiver as joint and several provisional liquidators. 8.On 13 July 2021, at the first meeting of creditors of the Company, the creditors unanimously resolved that Ms Wong and Mr Middleton be appointed as liquidators of the Company (“Liquidators”). On 9 August 2021, RSM applied to this Court for the appointment of the Liquidators over the Company. On 6 October 2021, RSM’s application was heard by this Court and an Order was made on the same day. Need for Recognition and Assistance 9.The Liquidators have a duty to collect in the Company’s assets and investigate into the affairs of the Company. The Liquidators require recognition and assistance in the Mainland in order to take possession of and deal with the Company’s substantial assets in the Mainland, which are principally located in Shenzhen. This includes the assets set out below.
10.As of the date of the Affidavit of Mr Middleton filed on 10 December 2021, the Liquidators have received the following claims from the Mainland against the Company:
11.On 29 November 2021, the Liquidators received a letter from Zhou Qiao Li confirming that the accounting records of the Company are currently kept at 2F, Tower A, South District, Zhaoheng Moju Yuan, Genyu Road, Tianliao Shequ, Guangming New District, Shenzhen. 12.According to records available to the Liquidators, the Company and/or its subsidiaries is or was involved in legal proceedings with the vendors in connection with the Company’s acquisition of Fujian Tailong Electric Power Co., Ltd (福建泰龙电力股份有限公司) in Hong Kong and in the Mainland. The Mainland legal proceedings include proceedings in the People’s Court of Zhangzhou City, Fujian Province, the Supreme People’s Court of Fujian Province and Intermediate People’s Court of Xiamen City, Fujian Province. Meanwhile, the Liquidators have also been informed by their legal counsel in the Mainland that the creditor (i.e., the Petitioner who petitioned for the winding up of the Company before this Court) together with the other banks of the consortium had instigated a legal action ((2021) 粤03民初6642号) against the Company, the Intermediate Parent and an indirect subsidiary of the Company with the Shenzhen Intermediate People’s Court. The said legal proceedings was accepted by the Shenzhen Intermediate People’s Court on 25 October 2021. The Liquidators were further informed that 25.11% of the shareholding interest held by the Company in the Mainland Holding Company was frozen by the Shenzhen Intermediate People’s Court with effect from 23 November 2021. 13.I am satisfied that it is desirable and necessary for the Liquidators appointment to be recognised by the Shenzhen Intermediate People’s Court and for that court to provide assistance to carry out the Liquidators’ function, which I describe in [13]–[14] of the decision in Re Samson Paper Co Ltd (In Liq)[2]. Jurisdiction 14.Article 4 of the SPC Opinion states:
15.As the Company is incorporated in Hong Kong it follows that unless there are matters, which demonstrate that its centre of main interests are located elsewhere the SPC Opinion applies to the Company and its Liquidators and this is a proper case in which to seek recognition and assistance. On the basis of the evidence before me in my view it would appear that the Company’s centre of main interests has been in Hong Kong since its incorporation as it has always been run out of Hong Kong [3]. Procedure for recognition specified in the SPC Opinion 16.Article 6 of the SPC Opinion sets out the procedure for an application by a Hong Kong liquidator (清盤人):
Determination 17.I have found in [13] above that it is desirable that the Liquidators’ appointment should be recognised and assisted in Shenzhen and in [15] that the criteria for issuing a letter of request are satisfied in the present case. It follows that in my opinion this is a proper case for a letter of request to be issued by the Hong Kong Court to the Shenzhen Intermediate People’s Court requesting that the Shenzhen Intermediate People’s Court make an order recognising the Liquidators and providing assistance to them. 18.I will make the following order:
Mr Jason Karas, Solicitor Advocate of Karas LLP, for the applicants
致：深圳市中级人民法院 鉴于: 1. 本法庭是对香港特别行政区（“香港”）的公司法和破产法行使管辖权的法庭。 2. 兆恒水电（香港）有限公司（“该公司”）是一家于2007年10月11日根据香港法律注册成立的公司。 3. 该公司隶属于在内地从事水力发电和供应的公司集团（“该集团”）。 4. 2021年1月19日，台湾银行香港分行向法院提出了将该公司清盘的呈请。公司自2021年5月17日，法院命令将该公司清盘，理由是其无力偿还债务。 5. 2021年7月13日，该公司债权人通过一项决议，确认委任Alvarez & Marsal Asia Limited（地址为香港中环雪厂街2号圣佐治大厦4楼405-7室）的Edward Simon Middleton先生和Wing Sze Tiffany Wong女士两人担任该公司的共同和各别清盘人(“清盘人”)。 6. 2021年10月6日，本法院发出一项命令，确认清盘人的委任。 7. 根据香港法律（包括《公司（清盘及杂项条文）条例》（香港法例第32章）第197及199条），授权清盘人共同及各別采取（其中包括）以下行动：
8. 清盘人认为，鉴于（其中包括）以下事实，若要根据香港法律有效行使他们的权力，需要深圳市中级人民法院认可他们的委任：
9. 因此，清盘人认为，根据香港法律，向深圳市中级人民法院寻求济助属适当行为，以便（特别及最重要的是）该法庭能认可清盘人及其权力。 10. 本案所提供的证据证明并令本法庭信纳，在其认为适当的范围内，向深圳市中级人民法院提出协助请求符合正义。为使清盘人能够履行其职责，谨请深圳市中级人民法院协助本法庭，授权清盘人根据适用的内地法律在内地行使香港法律赋予他们的所有权力、职责和酌情权。 11. 本法庭谨请深圳市中级人民法院为清盘程序及清盘人提供协助，签发命令并指示：
12. 本法庭确认，已根据香港的程序和法律发出本请求函及作出相关申请。 13. 为免产生疑问，寻求该协助旨在获得与本法庭因公司资产专属于本法庭的管辖范围内所授予的济助大致相符的济助。 14. 本法庭进一步确认，香港法院将在类似情况下，并在行使其固有管辖权时，认可深圳市中级人民法院的请求函，并就该请求函提供可能需要的协助（受香港法律的适用限制约束）。
TO: Shenzhen Intermediate People’s Court WHEREAS: 1. This Court is a court exercising jurisdiction in relation to company and insolvency law in the Hong Kong Special Administrative Region (“Hong Kong”). 2. Zhaoheng Hydropower (Hong Kong) Limited (“Company”) is a company incorporated under the laws of Hong Kong on 11 October 2007. 3. The Company is part of a group of companies which engages in generation and supply of hydropower in the Mainland (“Group”). 4. On 19 January 2021, a petition to wind up the Company was presented to the Court by Bank of Taiwan, Hong Kong Branch. On 17 May 2021, this Court ordered that the Company be wound up on the ground that it was unable to pay its debts. 5. On 13 July 2021, the creditors of the Company passed a resolution confirming the appointment of Mr Edward Simon Middleton and Ms Wing Sze Tiffany Wong, both of Alvarez & Marsal Asia Limited, Rooms 405-7, 4/F., St. George’s Building, 2 Ice House Street, Central, Hong Kong, as the joint and several liquidators of the Company (“Liquidators”). 6. On 6 October 2021, this Court made an Order confirming the appointment of the Liquidators. 7. Under Hong Kong law (including sections 197 and 199 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32)), the Liquidators are authorised jointly and severally to, among others:
8. The Liquidators consider that the effective exercise of their powers under Hong Kong law requires that their appointment be recognised by the Shenzhen Intermediate People’s Court because of, inter alia, the following facts:
9. Accordingly, the Liquidators consider it appropriate, as a matter of Hong Kong law, to seek relief from the Shenzhen Intermediate People’s Court, most specifically and importantly for the recognition of the Liquidators and their powers. 10. The evidence filed in these proceedings has demonstrated to the satisfaction of this Court that, in order for the Liquidators to discharge their duties, it is in the interests of justice to respectfully request the Shenzhen Intermediate People’s Court, to the extent it deems it appropriate to do so, to assist this Court by empowering the Liquidators to exercise all the powers, duties and discretions afforded to them under Hong Kong law within the Mainland in accordance with applicable Mainland law. 11. This Court hereby respectfully requests the Shenzhen Intermediate People’s Court to act in aid of the Liquidation proceedings and in aid of the Liquidators by ordering and directing that:
12. This Court confirms that this Letter of Request has been issued, and the associated application has been made, in accordance with the procedures and laws of Hong Kong. 13. For the avoidance of doubt, this assistance is sought to obtain relief broadly corresponding to the relief which would be granted by this Court if the Company’s assets were located exclusively within the jurisdiction of this Court. 14. This Court further confirms that the Hong Kong Court would in similar circumstances, and in the exercise of its inherent jurisdiction, recognise a letter of request from the Shenzhen Intermediate People’s Court and provide such assistance as may be requested in respect of that letter of request (subject to applicable limitations under Hong Kong law). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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