RE XJ INTERNATIONAL HOLDINGS CO LTD

HCCW 187/2024

[2024] HKCFI 1378

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 187 OF 2024

____________________

____________________

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JUDGMENT

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1.  The Bank of New York Mellon, London Branch (“the Petitioner”) presented a petition to wind up XJ International Holdings Co Ltd (“the Company”) based on an unmet statutory demand. At the conclusion of the hearing, judgment was reserved which I now give.

I. RELEVANT BACKGROUND

2.  The Petitioner is Trustee in connection with the US$350 million zero coupon convertible bonds due 2026 (“the Bonds”) issued by Tequ Mayflower Limited (“the Issuer”), a wholly owned subsidiary of the Company, and guaranteed by Hope Education Group Co Ltd (“the Guarantor”), the parent company.

3.  It is the Petitioner’s case that a put option (“the Put Option”) was duly exercised resulting in the Bonds being due and payable on 4 March 2024 which the Company disputes.

4.  On 5 March 2024, the Petitioner served a statutory demand on the Company (“the SD”) for payment of the amount due following the exercise of the Put Option in the sum of approximately US$325 million.

5.  The Petitioner presented the Petition to wind up the Company on 27 March 2024 when the SD went unmet after the 21 day period for payment.

6.  Meanwhile, on 12 March 2024 and subsequently on 4 April 2024 the Issuer accepted cancellations of the exercise of the Put Option made by certain bondholders such that as at 5 July 2024, the amount due and owing was reduced to approximately US $280 million (“the Debt”).

7.  Leave to amend the Petition was granted on 24 July 2024, no payment having been made by the Company in respect of the Bonds.

8.  The Company opposes the Amended Petition on the ground that the Debt is bona fide disputed on substantial grounds on the basis that there was no proper exercise of the Put Option; and alternatively, that an adjournment be granted for the Company to restructure its debts.

9.  At the hearing, the Court was informed that the Company would not be pursuing the restructuring alternative.

II. WHETHER THE DEBT IS BONA FIDE DISPUTED ON SUBSTANTIAL GROUNDS

10.  The issue that arises is whether there is a substantial dispute concerning the question whether the Put Option was validly exercised.

11.  That turns on the proper construction of the provisions of the Trust Deed dated 2 March 2021 made by the Issuer, the Guarantor and the Petitioner as Trustee (“the Trust Deed”) which, as defined, includes any other document executed in accordance with the Trust Deed and expressed to be supplemental to it.

12.  The Petitioner referred to the features of the global note structure as described in Re Leading Holdings Group Limited [2023] 4 HKLRD 71 at §53[1], and §§57-60 by way of background information.

13.  Under the terms of the Trust Deed which constituted the Bonds[2], in addition to being Trustee, the Petitioner is also the “Common Depository” and the “Principal Agent”.

14.  Schedule 1, Part B set out the form of the Global Certificate and Schedule 2, the terms and conditions of the Bonds (“the Conditions”).

15.  The Global Certificate was issued on the same date as the Trust Deed.

16.  Clause 1.1 of the Trust Deed contained definitions of expressions used in the Trust Deed. Of particular relevance are the following:

•  “Bondholder”, “holder of the Bonds” or, in respect of a Bond, “holder” are defined to mean a person in whose name a Bond is registered in the register of holders of the Bonds

•  “Common Depository” means, in relation to the Bonds, a depository common to Euroclear and Clearstream

•  “Conditions” means the terms and conditions applicable to the Bonds which shall be substantially in the form set out in Schedule 2, as modified, with respect to any Bonds represented by the Global Certificate, by the provisions of such Global Certificate …

•  “Global Certificate” means a Certificate representing Bonds that are registered in the name of a nominee of the Common Depository

17.  Clause 3 provided that the Bonds would initially be represented by the Global Certificate which shall be registered in the name of a nominee of the Common Depository and deposited with the Common Depository and the registered holder of any Bond would be treated as its absolute owner for all purposes (sub-clauses 3.1 and 3.4).

18.  Clause 12 contained provisions supplemental to the Trustee Act. They include the following:

(a) sub-clause 12.8: “Discretion” which provides that the Trustee has absolute and unfettered discretion as to the exercise or non-exercise of its functions, rights powers and discretions and is not bound to exercise any discretion or power or act at the request or direction of the Bondholders and first indemnified or secured or pre-funded against all actions etc; and

(b) sub-clause 12.23: “Interests of Holders through the Clearing System” which provides that in considering the interests of Bondholders while the Global Certificate is registered in the name of any nominee for a clearing system, the Trustee may have regard to any information provided to it by such clearing system as to the identity of its account holders with entitlements to the Global Certificate and “may consider such interests as if such accountholders were the holders of the Bonds represented by the Global Certificate”.

19.  Condition 8(D) of the Schedule 2 Conditions governs the redemption of the Bonds and provides as follows:

“(D) Redemption at the option of the Bondholders

“The Issuer will, at the option of the holder of any Bond, redeem all or some only of such holder’s Bonds on March 2, 2024 (the “Put Option Date”) at 103.04% of the principal amount. To exercise such option, the holder must deposit at the specified office of any Paying Agent a duly completed and signed put notice in the form for the time being current, obtainable from the specified office of any Paying Agent, together with the Certificate evidencing the Bonds to be redeemed not more than 60 days and not less than 30 days prior to the Put Option Date. A put notice, once delivered, shall be irrevocable and may not be withdrawn without the Issuer’s consent and the Issuer shall redeem the Bonds the subject of a put notice on the Put Option Date.”

20.  That provision can be broken down into 3 component parts: (i) the content of the right of redemption; (ii) the mode of exercise; and (iii) its irrevocability once given unless the issuer consents to its modification or withdrawal.

21.  Turning to the Global Certificate, it states in the ‘preamble[3]’, inter alia, that (i) the Issuer certified that the Bank of New York Depository (Nominees) Limited (“Registered Holder”)[4] as nominee of the Common Depository is entered in the register of Bondholders as the holder of Bonds in the principal amount of US $350 million; (ii) the Bonds are convertible into fully-paid ordinary shares in the Guarantor; (iii) the holder of the Bonds is bound by all the provisions of the Trust Deed and those provisions applicable to it of the Agency Agreement; the Registered Holder is entered in the Register as the holder of the Bonds represented by the Global Certificate which is evidence of entitlement only (title to the Bonds passes only on due registration on the Register); only the holder of the Bonds is entitled to payments in respect of the Bonds represented by the Global Certificate; and (iv) the Conditions take effect as modified by the provisions of the Global Certificate.

22.  There followed a number of provisions under specific rubrics including “Trustee’s Powers[5]” and “Bondholder’s Redemption” which featured prominently in the parties’ respective interpretations of what is required for a valid exercise of the Put Option:

“Trustee’s Powers

In considering the interests of Bondholders while this Global Certificate is registered in the name of a nominee of a common depository for a clearing system, the trustee may, to the extent it considers it appropriate to do so in the circumstances, but without being obligated to do so, (a) have regard to any information as may have been made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its accountholders (…) with entitlements in respect of the Bonds and (b) consider such interests on the basis that such accountholders were the holders of the Bonds in respect of which this Global Certificate is issued. (Italics supplied)

…

Bondholder’s Redemption

“The Bondholder’s redemption option in Condition 8(D) … may be exercised by the holder of this Global Certificate giving notice to the Principal Agent of the principal amount of Bonds in respect of which the option is exercised in presenting this Global Certificate for endorsement or exercise (if required) within the time limits specified in the Conditions.”

23.  It is common ground that Condition 8(D) takes effect as modified by the Bondholder’s Redemption (“the Modified Provision”).

III. EXERCISE OF THE PUT OPTION

24.  Ms Eva Sit SC and Mr Justin Ho, counsel for the Petitioner, submitted that in terms of the Bonds in question, it is intended that there should be a Global Certificate only registered in the name of the Nominee Company[6] but that the Nominee Company has no economic interest in the Bonds. The accountholders who have the economic interest operate their investments through the clearing system.

25.  Ms Sit explained that the Petitioner is the central interface between the Issuer who would ultimately have the liability to pay the Bonds and the beneficial holders who gave the economic value.

26.  The Petitioner discharges various roles: it is (i) the Common Depository who safe-keeps the Global Certificate; (ii) the Trustee through whom the accountholders will have to act, the Trustee being the decision-making entity as to whether or not there should be steps or recourse taken with respect to the Bonds and who holds the benefit of the Bonds on trust for the accountholders; and (iii) it also acts as agent of the Issuer and Trustee.

27.  The Petitioner submitted that to trigger Condition 8(D), there are 2 requirements: (i) to give notice to the paying agent by depositing the put notice with the paying agent; and (ii) to present the bond certificate to the paying agent.

28.  As earlier noted, Condition 8(D) was modified by the terms of the Global Certificate. Under the Modified Provision, redemption may be exercised by “the registered holder of the Bond” giving notice to the Principal Agent of the principal amount of Bonds in respect of which the option is exercised and presenting the Global Certificate for endorsement or exercise (if required) within the time limits specified in the Conditions.

29.  2 points of construction arise from the Modified Provision: (i) the entity entitled to give notice; and (ii) whether the phrase “if required” attaches to the requirement to present the Global Certificate or to the time limits within the Conditions.

30.  Thus, the exercise of the Put Option requires the giving of notice. Whether or not presentation of the Global Certificate is necessary turns on the proper interpretation of the phrase “if required”.

A.  Notice

31.  It is the Petitioner’s case that the terms of the Global Certificate must be looked as a whole and that the words “holder of this Global Certificate” have to be read together with the “Trustee’s Powers”. While the Global Certificate is registered in the name of the Nominee Company, the Modified Provision[7] authorises the Trustee in considering the interests of the bondholders to (a) have regard to any information made available to it by the clearing system as to the identity of its accountholders with entitlements in respect of the Bonds and (b) consider such interests “on the basis that such accountholders were the holders of the Bonds[8]”.

32.  The Petitioner submitted that the focus should be on the use of the word “holder” in the Modified Provision. At the same time regard is to be had to sub-clause (b) of “Trustee’s Powers” which, it is said, “taps” into “holder of this Global Certificate” under the Modified Provision and they have to be read together because they are referring to the same subject matter.

33.  The Petitioner further submitted that that was exactly what was done, referring to an email from Mr Ma[9] to the Issuer dated 9 February 2024 (“the 9 February email”) which read:

Dear Issuer,

Please note the below Put Option Result.

Put Option Settlement Date: 2 March 2024.

We will provide payment notice to you 2 weeks in advance.

Thank you.

ISSUER NAME: Tequ Mayflower Limited - Due: 02.03.2026

ISIN:XS2307183694

A Put option is due on the above mentioned issue on 02/Mar/2024 (paying 04/Mar/2024) and the notice period ends on 01/Feb/2024.

As today is the deadline date, the clearing systems have confirmed their figures below:

Euroclear instructions electing to Put	nominal USD	253,689,000
Clearstream instructions electing to Put	nominal USD	61,411,000
Total instructions electing to Put	nominal USD	315,100,000

34.  That email shows that the accountholders (those who have the economic value) notified whether or not they wished to exercise their rights in relation to the redemption option through the clearing systems. The result of the Put Option exercise which came from the clearing systems was provided to the Issuer and the Company as well as the Petitioner which is the Paying Agent and the Principal Agent in this particular case.

35.  In fact, a week or so earlier, on 1 February 2024 which was the deadline date, the Petitioner (as Principal Agent) sent a facsimile to the Issuer (“the 1 February facsimile”) notifying it of the nominal value of the beneficial holders’ instructions electing to exercise the Put Option. This facsimile was incorporated into the 9 February email set out in §33 above.

36.  It was submitted that in cases where you just have the Global Certificate, the powers conferred on the Trustee explain how one should go about looking at who has the economic interest and how those who have those rights wish to exercise them. Therefore one looks at the accountholders’ interest and treat the accountholders as if they were the holders of the bonds.

37.  The Petitioner also relied on the fact that the Trust Deed does not contain a mechanism whereby the interest or the instructions of the accountholders as opposed to the bondholders would be transmitted.

38.  Mr Victor Joffe SC and Mr Du Jinsong, counsel for the Company, disagreed with the Petitioner’s reading. They submitted that for the purposes of the Modified Provision, the “holder of this Global Certificate” must mean its Registered Holder, namely, the Nominee Company. It is so stated in the Global Certificate and is entirely consistent with the definition in the Trust Deed as well as clause 3[10].

39.  The Company submitted that a valid exercise of the Put Option required the Registered Holder (the Nominee Company) (a) to give notice to the Principal Agent; and (b) to present the Global Certificate for endorsement or exercise (if required) within the time limits specified in the Conditions.

40.  Mr Joffe referred to §25 of the Amended Petition which simply states that:

“on 1 February 2024, pursuant to Condition 8(D), Bondholders holding 100% … of the aggregate outstanding principal amount of the Bonds submitted that Put Option Notice and exercised the Put Option."

41.  He highlighted the fact that there is no averment that the Nominee Company gave notice to the Principal Agent as required by Condition 8(D). Nor is there any evidence from the Petitioner that the Nominee Company gave notice to the Principal Agent before 1 February 2024 of the exercise of the Put Option.

42.  §25 of the affirmation of Mr Ma dated 11 June 2024 (“Ma 1^st”) appears to state that the “holder of the Global Certificate” is the Petitioner in its capacity as the Common Depository[11].

43.  While it is common ground that the Common Depository has physical possession of Global Certificate, it is not apparent how the Common Depository could fall within the definition of “Registered Holder” or “holder of the Bonds” in §1.1 of the Trust Deed as that was left unexplained.

44.  On the question of giving notice to the Principal Agent, the Petitioner’s original stance is set out in §24 (2) of its written submissions, namely:

“The Petitioner received instructions to exercise the Put Option from the accountholders … Since the Petitioner is also the “Principal Agent” and “Paying Agent”, notice of Put Option exercise had been given (by the Petitioner qua holder of Global Certificate to itself qua “Principal Agent”).

45.  At the hearing, in reply, the Petitioner informed the Court that it is not relying words shown within parentheses in §24 (2) of its written submissions.

46.  Nevertheless, the Petitioner’s case appears to be that when it received instructions via the Clearing Systems[12]from the beneficial owners to exercise the Put Option, because of its different roles (as Trustee, Principal Agent and Paying Agent), the requisite notice for redemption “had been given”. But by whom?

47.  The Petitioner relied on the 9 February email as constituting the requisite notice. In other words, the Petitioner was the entity giving the requisite notice. However, Ma 1^st at §40[13] expressly denied that the 1 February facsimile was the requisite notice for the exercise of the Put Option. As earlier noted[14], the 1 February facsimile was incorporated into and constituted part of the 9 February email. It is not apparent how the Petitioner’s seemingly contradictory positions are to be reconciled.

48.  Mr Joffe referred to 2 emails sent to Mr Ma on 17 February 2024 from the Company/Guarantor. The 1^st email was sent around 11 am belatedly (due to Chinese New Year holidays) acknowledging receipt of the 1 February facsimile. The 2^nd email was sent around 6 pm the same day stating that the Guarantor’s lawyer “needs a formal document for the redemption notice. Could you send to me ASAP?”

49.  Had any document been in existence evidencing notice being given, there would have been an answer to the 2^nd email of 17 February 2024. There was none.

50.  The Company submitted that the operational flow of the Put Option Exercise contemplated by the Modified Provision is wholly different from the transfer of book-entry interests in the intermediated, dematerialised securities under the Global Certificate structure.

51.  In that regard,

(i) accountholders (i.e. owners of interests in the Bonds) under Euroclear and/or Clearstream are not registered in the register of holders of the Bonds except in the circumstances stated in the first paragraph on page 2 of the Global Certificate which events have yet to occur;

(ii) accountholders are different legal persons from the Registered Holder (the Nominee Company) of the Bonds; and

(iii) the Global Certificate specifically provides[15] that

“only[16] the holder of the Bonds represented by this Global Certificate is entitled to payments in respect of the Bonds represented by this Global Certificate.”

52.  As stated in Goode and Gulliver on Legal Problems of Credit and Security, 7^th ed., 2023, the very purpose of the structure of Global Certificate is to achieve the “No Look Through Principle”. The accountholder thus has a relationship exclusively with its own intermediary and neither it nor its secured or execution creditors can assert rights against higher-tier intermediaries or the issuer.

53.  Under the Trust Deed, accountholders have no specific right to redeem the Bonds directly against the Issuer. That being the case, there can be no legal basis for the proposition that the accountholder can exercise the Put Option. The Company submitted that only the Nominee Company, being the Registered Holder, can implement it.

54.  In any event, the 1 February facsimile, the 9 February email and the email with a payment notice dated 19 February 2024 all emanated from the Petitioner and could not (on any view) constitute any notice of redemption by the Nominee Company.

B.  The need to present the Global Certificate

55.  It is common ground that under the Modified Provision, the Principal Agent would be entitled to require the presentation of the Global Certificate by the holder of the Bond for endorsement to reflect a put exercise.

56.  The Petitioner submitted that the phrase “if required” attaches to the presentation of the Global Certificate and that it made good sense because “the Petitioner is holding the Global Certificate, so it would then be presenting it to itself”.

57.  Its stance is that it would only be required if it is necessary and in the present case there is evidence[17] that the Principal Agent did not require the presentation of the Global Certificate because it is the same entity as the holder of the Global Certificate (the Common Depository/Petitioner) and, as such the presentation would have been to itself. On that basis, there was no breach of the requirement of presentation.

58.  The Company took issue with the assertion in Ma 1^st at §35 that “as such the presentation would have been to itself” because the Principal Agent is not the same entity as the holder of the Global Certificate.

59.  On the Company’s reading of the Modified Provision, the phrase “if required” refers to the words following that phrase, that is, the situation where the Bondholder requires the option to be exercised within the specified time limits.

60.  The Company submitted that the purpose of presentation of the Global Certificate is for “endorsement” or “exercise”. Where all the Bonds are redeemed, the Global Certificate would need to be cancelled. If redemption is only partial, it would need to be endorsed. Therefore, the certificate would always be required for one or other of the purposes.

C.  Conclusion

61.  As earlier noted, whether or not the requisite notice for redemption was given turns on the true construction of “holder of the Bond” which would identify the entity entitled to give notice. That, in turn, would clarify whether the presentation requirement had been satisfied.

62.  For the reasons stated below, I am of the view that the Company has demonstrated that there is a bona fide dispute on substantial grounds that the Put Option had not been validly exercised and that therefore a substantial dispute exists as to the existence of the Debt.

63.  The Petitioner’s reliance on the provision under the rubric “Trustees Powers” is hardly dispositive on the construction issue. That provision is merely permissive and does not impose any obligation on the Trustee. It simply says that in the situation (as is the present case) where the Global Certificate is registered in the name of a nominee of the common depository for a clearing system, in considering the interests of Bondholders the trustee “may … but without being obligated to do so …” do various things.

64.  Further, the interpretation the Petitioner put forward directly contradicts the meaning expressly given to “Bondholder”, “holder of Bonds” as defined in the Trust Deed and recognised in clause 3. It is not an interpretation one would adopt without exceptional and compelling reasons.

65.  Giving effect to the assigned meaning in clause 1.1 of the Trust Deed neither negates nor constrains the Trustee from exercising the Trustee’s Powers. Upon receiving the Put Option result from the clearing systems (which shows the wishes of the accountholders), the Petitioner could choose to exercise the Trustee’s Powers conferred by the Global Certificate by taking action to ensure that those Bonds are redeemed. As the Common Depository, it could direct or cause the Nominee Company to give the requisite notice to the Principal Agent which is the Petitioner.

66.  The Petitioner’s construction of that expression would create a parallel track for redemption which is not expressly provided in Trust Deed.

67.  Moreover, in view of § 51(iii) above, it is unclear how any entity other than the Registered Holder can be entitled to payments in respect of the Bonds.

68.  The 2^nd point of construction that arises is also validly raised. Accordingly, which of the rival constructions should prevail is plainly arguable.

69.  A number of matters arose in the course of the hearing. For completeness, I will deal with those below.

IV.  MISCELLANEOUS MATTERS

(a)  Estoppel and nature of the dispute raised

70.  The Company’s written submissions addressed the issue of estoppel which it considered had been raised by the Petitioner. Ms Sit clarified that the Petitioner was not running an estoppel argument but that the 9 February email informed the Company of the Put Option result and the Company’s subsequent conduct essentially acknowledged that the redemption right had been exercised: it became liable and it was unable to pay.

71.  Against that backdrop the Petitioner submitted that the bona fide dispute being put forward by way of defence is not one which is genuinely adopted, believed or espoused by the Company.

72.  The Petitioner relied on announcements by the Company as compelling evidence that the Company did not honestly believe in the existence of a bona fide dispute.

73.  The Company submitted that what is required of the Company is to demonstrate that there is “a substantial dispute”. Mr Joffe referred to McPherson & Keay’s The Law of Company Liquidation 5^th Edn at §3-080 which states that the Company’s belief is irrelevant. While the various descriptions given to the kind of dispute that must exist is rather confusing, nothing seems to turn on the use of different words such as “bona fide disputed” and “disputed on some substantial grounds”. The courts have focused on the issue of substance, whether or not the dispute is real and not frivolous.

74.  The Petitioner did not challenge the authority cited.

(b)  Whether the Company made admissions

75.  The Petitioner submitted that the announcements concerned the Company’s acknowledgement that it did not have the financial ability to redeem the Bonds[18]; that an event of default had occurred under the Bonds to March 2024[19]; that the Company had been served with a SD and the Petition. The Company has therefore repeatedly admitted to the public its liability to pay under the Bonds. The Petitioner submitted that that is a clear indication that the Company had always understood that the Put Option had been validly exercised and that the Debt was due and owing.

76.  The Petitioner’s stance is that all the facts and evidence the Company now relies on have been available to the Company all along.

77.  The Company submitted that the announcements cannot be relied on as admissions of liability. All of the announcements from 22 February 2024 to 5 March 2024 preceded the SD which was served on 5 March.

78.  Mr Joffe explained that at the time of those announcements, what the Company had by way of evidence demonstrating the exercise of the Put Option were the 1 February facsimile, the 9 February email and 19 February email[20].

79.  He submitted that it is not possible to discern the factual basis as to how the option was exercised from those 3 documents. The Company did not know what really happened and the announcements were based on the incorrect assumption that the Petitioner’s claim as to a valid exercise of the option was true.

80.  The SD served on the Company contained a 5 page annexure providing particulars of the Debt that relied on Condition 8(D) and not the Modified Provision. That was also the case in the Petition[21].

81.  §21 of the particulars did not provide any detail and merely stated that “Bondholders” holding 100% submitted the put option and exercised the put option requiring the issuer to redeem. The Company submitted that it was impossible to discern from the particulars how factually the put option was exercised and the 6 March announcement was made on the same incorrect assumption. At that stage the Company had no information that the exercise might be invalid.

82.  The Petition which was presented on 27 March 2024 repeated what was stated in the SD. The Company’s announcements (on 28 March and 14 April 2024) subsequent to the Petition proceeded on the same incorrect assumption. There is no evidence that the Company appreciated at the time when the announcements were made the point that the option had not been validly exercised.

83.  Ma 1^st filed on 11 June 2024 was the first explanation[22] from the Petitioner as to how the option was exercised and how reliance was placed on instructions from the beneficial owners. §40 stated that

“It is wholly incorrect for the Company to characterise the [1 February] email as the “Put Notice” for the purpose of exercising the Put Option … Neither my email dated 9 February 2024, nor the facsimile dated 1 February 2024, was the requisite notice for the exercise of the Put Option.”

84.  Given that evidence, it is clear that what the Company had when it made the public announcements were the 1 February facsimile and 9 February email which did not contain the necessary information. Following the Company/Guarantor’s 2^nd email of 17 February, the Petitioner eschewed the opportunity to provide the requisite evidence. In the circumstances, the announcements could not have amounted to admissions by the Company.

(c)  Enforcement

85.  The Petitioner relied on its powers under clause 12.26 of the Trust Deed and Condition 12 to enforce repayment of the Bonds and the provisions of the Trust Deed to petition for the winding up of the Company. That generated a discussion as to whether a winding-up petition is the appropriate means.

86.  The Petitioner relied on the Court of Final Appeal’s judgment in Re Shandong Chengming Paper Holdings Ltd (2022) 25 HKCFAR 98 which held at §42 that it is entirely proper to seek to enforce payment of an undisputed debt by the presentation of a winding-up petition. Pressure on a debtor to pay an undisputed debt is a proper benefit of allowing a winding-up petition to proceed.

87.  The short point is that the passage is concerned with a case where there is an undisputed debt. Where, as in the present case, there is a substantial dispute regarding the existence of the Debt, the Shandong case cannot assist the Petitioner.

V.  CONCLUSION

88.  For the reasons stated above, I have no difficulty in concluding the Debt is disputed on substantial grounds.

89.  Until the creditor is established as a creditor he is not entitled to present a petition and has no locus standi: see per Ungoed-Thomas J in Mann v Goldstein [1968] 1 WLR 1091 (at 1099). That statement was approved by Buckley LJ in Stonegate Securities Limited v Gregory [1980] Ch 576 (at 580).

90.  Accordingly, as is the usual practice in such cases, the Petition is dismissed with an order nisi of costs with certificate for 2 counsel in favour of the Company, such costs to be summarily assessed and payable forthwith.