In Nuoxi Capital Ltd v Peking University Founder Group Co Ltd [2021] HKCFI 3817, Mr Justice Harris held that keepwell disputes should be determined in Hong Kong in accordance with the contractual exclusive jurisdiction clause, notwithstanding the Court recognising the keepwell provider’s Mainland insolvency proceedings.
In Re Samson Paper Holdings Ltd[2021] HKCFI 3288, the Honourable Mr. Justice Harris sanctioned a scheme of arrangement notwithstanding that there were proposed modifications after the relevant scheme meeting.
In Re HNA Group Co Limited[2021] HKCFI 2897, the Hong Kong Court recognised for the first time reorganisation proceedings commenced under the Mainland Enterprise Bankruptcy Law (“Mainland Reorganisation Proceedings”).
Test for risk of dissipation
The Court at first instance held that the Applicants failed to establish that the Company was insolvent. The key findings that informed the Associate Judge’s conclusions included the following:
- the funds that were available to the Company to pay its debts included funds in an offset account in the name of the director (and an account in the name of the director’s wife); and
- the Applicants’ claims were based on unreconciled accounts of the Company.
The Applicants were granted leave to appeal and appealed the decision of the Court a quo.
In Re Cosmos Machinery Enterprises Ltd [2021] HKCFI 2088, Mr Justice Harris corrected some privatisation scheme practice and issued the following guidance:
(1) Rule 2.10 of the Code on Takeovers and Mergers (“Rule 2.10”) did not prevent offeror concert parties from voting on privatisation schemes.
In Re Samson Paper Co Ltd [2021] HKCFI 2151, the Hong Kong Court issued for the first time a letter of request to the Shenzhen Bankruptcy Court requesting the latter to recognise and assist Hong Kong liquidators.
The Federal Court has clarified the ability of an assignee of a claim by a liquidator pursuant to s 100-5 of the Insolvency Practice Schedule to rely upon information and documents obtained from a public examination in private proceedings relating to the assigned claim: LCM Operations Pty Ltd, in the matter of 316 Group Pty Ltd (In Liquidation) [2021] FCA 324.
Takeaways:
The interplay between an arbitration clause and a creditor’s winding up petition is a vexed question which has given rise to a string of cases, including Lasmos Ltd v Southwest Pacific Bauxite (HK) Ltd [2018] 2 HKLRD 449, Re Asia Master Logistics Ltd [2020] 2 HKLRD 423 and But Ka Chon v Interactive Brokers LLC [2019] 4 HKLRD 873.
In Re China Huiyuan Juice Group Limited [2020] HKCFI 2940, Harris J discussed in detail the difficulties which liquidators appointed in Hong Kong over a foreign incorporated holding company may have in obtaining control of operating subsidiaries in the Mainland, if the group’s structure includes intermediate subsidiaries incorporated in the British Virgin Islands (the “BVI”).