RE LAI KAR YAN (DEREK) AND HO KWOK LEUNG GLEN AS THE JOINT AND SEVERAL LIQUIDATORS OF SAMSON PAPER CO LTD (IN CREDITORS’ VOLUNTARY LIQUIDATION) (“COMPANY”)

HCMP 963/2021

[2021] HKCFI 2151

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 963 OF 2021

________________

________________

________________

D E C I S I O N

________________

The Application

1.  On 14 May 2021 the Supreme People’s Court and the Secretary for Justice signed what I shall refer to as the “Cooperation Mechanism”, which provides a procedure for mutual recognition of insolvency processes and office holders by the High Court of Hong Kong and the Intermediate People’s Courts in three jurisdictions: Shenzhen, Shanghai and Xiamen.  The Cooperation Mechanism consists of two documents, which in English are called the “Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region and Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Court of the Mainland and the Hong Kong Special Administrative Region” and the Supreme People’s Court’s “Opinion on taking forward a pilot measure in relation to Recognition and Assistance to Bankruptcy (Insolvency) Proceedings in the Hong Kong Special Administrative Region” (“SPC Opinion”).  Prior to May 2021 there had been two cases [1] in which I had made orders for recognition and assistance on the application of administrators (管理人)[2] in the Mainland with the support of letters of request from the relevant Intermediate People’s Courts.  On 8 July 2021 Derek Lai Kar Yan and Glen Ho Kwok Leung of Deloitte issued an ex parte originating summons requesting an order that “A simplified Chinese version of the letter of request in the form annexed hereto to be issued to the Bankruptcy Court of the Shenzhen Intermediate People’s Court seeking its assistance in aid of the Company’s liquidation and the Liquidators.”  This is the first application made in accordance with the Cooperation Mechanism in either Hong Kong or the Mainland.  Formal recognition by the Shenzhen Intermediate People’s Court (“Shenzhen Court”) would be the first occasion on which a court in the Mainland has formally recognised and assisted a liquidator appointed by the Hong Kong High Court.  As I explain in [27]–[32] of my decision in Re CEFC Shanghai International Group Ltd [3] a liquidator appointed by the High Court of Hong Kong, or a Court outside the People’s Republic of China, has never been formally recognised by a Mainland Court.  This application is, therefore, of some significance in the development of cooperation between Hong Kong and the Mainland in the sphere of corporate insolvency.

The Reasons for the Application

2.  Samson Paper Company Limited (“Company”) is incorporated in Hong Kong.  It is part of a corporate Group headed by Samson Paper Holdings Limited (“Holdings”), which is incorporated in Bermuda and listed on the Stock Exchange of Hong Kong.  Mr Lai and Mr Ho were appointed as provisional liquidators of Holdings by the Supreme Court of Bermuda on 24 July 2020 on a soft-touch basis.  This appointment I recognised on 13 August 2020.  On 14 August 2020 the intermediate group subsidiary, which held the voting shares in the Company resolved to wind up the Company on the grounds of insolvency and appointed Mr Lai and Mr Ho as liquidators (“Liquidators”).  Their appointment was confirmed at a meeting of creditors on 25 August 2020.

3.  The Liquidators have formed the view that they need to obtain recognition and assistance in order to deal with the Company’s substantial assets in the Mainland, which are principally located in Shenzhen.  The assets fall into three categories:

(1)     Wholly-owned subsidiaries (“Subsidiaries”) including a wholly-owned subsidiary in Shenzhen, namely Samson Paper (Shenzhen) Company Limited (“Samson Shenzhen”)     （森信纸业（深圳）有限公司）, which in turns holds two wholly-owned branches in Nanning and Xiamen; and a wholly-owned subsidiary in Shanghai, namely NJ Trading (Shanghai) Company Limited (“Samson Shanghai”) （能京商贸（上海）有限公司）;

(2)     receivables (as of 14 August 2020) in the aggregate sum of approximately HK$422 million due from affiliated companies incorporated in the Mainland, which I summarise in the following table:

Name of company	HKD
Universal Pulp & Paper (Shangdong) Co. Ltd （远通纸业（山东）有限公司）	208,567,255
Samson Shenzhen	93,015,577
Samson Shanghai	60,689,874
Sino Development (Tianjin) International Trading Co. Ltd （建成（天津）国际贸易有限公司）	32,544,776
SJ (China) Company Limited (Formerly known as Universal Pulp & Paper (Jiangsu) Co. Ltd) （诚仁（中国）有限公司（前称「远通纸业（江苏）有限公司」））	19,219,773
Shanghai Samson (Culture) Company Ltd （上海森信文化用品有限公司）	7,799,018

(3)     an apartment in Beijing.

4.  I am satisfied that it is desirable that the Liquidators’ appointment is recognised and assistance provided in Shenzhen by the Shenzhen Court in order that the Liquidators can collect in the assets within the jurisdiction of the Shenzhen Court.

Jurisdiction

5.  Article 4 of the SPC Opinion states:

“ 四、 本意見適用於香港特別行政區系債務人主要利益中心所在地的香港破產程序。

本意見所稱“主要利益中心”，一般是指債務人的註冊地。同時，人民法院應當綜合考慮債務人主要辦事機構所在地、主要營業地、主要財產所在地等因素認定。

在香港管理人申請認可和協助時，債務人主要利益中心應當已經在香港特別行政區連續存在6個月以上。

4. This Opinion applies to Hong Kong Insolvency Proceedings where the Hong Kong Special Administrative Region is the centre of main interests of the debtor.

‘Centre of main interests’ referred to in this Opinion generally means the place of incorporation of the debtor. At the same time, the people’s court shall take into account other factors including the place of principal office, the principal place of business, the place of principal assets etc. of the debtor.

When a Hong Kong Administrator applies for recognition and assistance, the centre of main interests of the debtor shall have been in the Hong Kong Special Administrative Region continuously for at least 6 months.”

6.  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 [4].

The principles governing the grant of a letter of request

7.  The technique of issuing letters of request to foreign courts to facilitate the task of the liquidator who seeks assistance from a foreign court appears to be a creature of the common law.  Letters of request are a private international law response to ancient public international law notions of territorial sovereignty, according to which the jurisdiction of the courts of one sovereign state does not run beyond that sovereign state’s own territorial limits [5].

8.  The law is well-settled that the Court has an inherent jurisdiction to grant a letter of request in order to permit Hong Kong liquidators to seek recognition and assistance in another jurisdiction [6]. In considering whether to grant a letter of request, the Court has to consider which jurisdiction is the most appropriate or convenient forum for the determination of the issue in question applying generally applicable jurisdictional principles [7].

9.  The granting of a letter of request in the present case would be consistent with these principles.  The Liquidators have a duty to collect in the Company’s assets.  The assistance that the Liquidators need in the Mainland relate to conventional asset collection action [8]. In order to carry out this function the Liquidators have an express statutory power in Hong Kong to commence legal proceedings to recover assets and this includes commencing proceedings outside Hong Kong [9].

Procedure for recognition specified in SPC Opinion

10.  Article 6 of the SPC Opinion sets out the procedure for an application by a Hong Kong liquidator (清盤人):

“ 六、申請認可和協助香港破產程序的，香港管理人應當提交下列材料：

(一) 申請書；

(二) 香港特別行政區高等法院請求認可和協助的函；

(三) 啟動香港破產程序以及委任香港管理人的有關文件；

(四) 債務人主要利益中心位於香港特別行政區的證明材料，證明材料在內地以外形成的，還應當依據內地法律規定辦理證明手續；

(五) 申請予以認可和協助的裁判文書副本；

(六) 香港管理人身份證件的複印件，身份證件在內地以外形成的，還應當依據內地法律規定辦理證明手續；

(七) 債務人在內地的主要財產位於試點地區、在試點地區存在營業地或者在試點地區設有代表機構的相關證據。向人民法院提交的文件沒有中文文本的，應當提交中文譯本。

6. The Hong Kong Administrator applying for recognition of and assistance to Hong Kong Insolvency Proceedings shall submit the following materials:

(1) an application;

(2) a letter of request for recognition and assistance issued by the High Court of the Hong Kong Special Administrative Region;

(3) the relevant documents on the commencement of the Hong Kong Insolvency Proceedings and in relation to the appointment of the Hong Kong Administrator;

(4) materials showing that the debtor’s centre of main interests is in the Hong Kong Special Administrative Region, and if any of such materials was issued outside the Mainland, it shall be certified in accordance with the law of the Mainland;

(5) a copy of the judgment in respect of which the application for recognition and assistance is made;

(6) a copy of the identity document of the Hong Kong Administrator, and if such identity document was issued outside the Mainland, it shall be certified in accordance with the law of the Mainland;

(7) evidence showing that the debtor’s principal assets in the Mainland are in a pilot area, or that it has a place of business or a representative office in a pilot area.

Where a document to be submitted to a people’s court of the Mainland is not in the Chinese language, a Chinese translation shall be submitted.”

11.  As can be seen from [6(2)] and [6(5)] in order for an application for recognition to be granted it is necessary for the Hong Kong Court to provide two documents.  The first is a letter of request.  The second is a judgment determining that a letter of request should be issued.

12.  I have found in [4] above that it is desirable that the Liquidators’ appointment should be recognised and assisted in Shenzhen and in [10] 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 Court requesting that the Shenzhen Court make an order recognising the Liquidators and providing assistance to them.

Liquidators’ function and powers

13.  For the benefit of the Judge of the Shenzhen Court who will deal with the Liquidators’ application for recognition and assistance it will be helpful if I summarise the Liquidators’ powers and function under Hong Kong law.  Under Hong Kong law and, in particular section 251 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32, the Liquidators are authorised jointly and severally to exercise the following functions and powers:

(1)  take into their custody, or under their control, all the property and things in action to which the Company is or appears to be entitled;

(2)  sell the real and personal property and things in action of the Company by public auction or private contract, with power to transfer the whole of the property and things in action to any person or company, or to sell them in parcels;

(3)  do all acts and execute, in the name and on behalf of the Company, all deeds, receipts and other documents, and for that purpose use, when necessary, the Company’s seal; and

(4)  do all other things as may be necessary for winding up the affairs of the Company and distributing its assets.

14.  It is desirable that the Liquidators are able to exercise the same functions and powers in Shenzhen as in Hong Kong to the extent that the laws of the Mainland provide that an administrator in the Mainland has the same or substantially similar functions and powers.  The Hong Kong Court would, as the decisions in CEFC Shanghai [10] and Shenzhen Everrich [11] demonstrate, in similar circumstances recognise a letter of request from the Shenzhen Court and provide such recognition and assistance as may be requested subject to compliance with the procedure stipulated in the SPC Opinion and any applicable limitations under Hong Kong law.

15.  As I have explained in [1] the Liquidators seek an order for issue of a letter of request in simplified Chinese to the Bankruptcy Court of the Shenzhen Court.  As I understand the position the Bankruptcy Court although physically separate to the rest of the Shenzhen Court is an administrative section of the Shenzhen Court rather than a separate entity and I, therefore, think it more appropriate to direct the letter of request simply to the Shenzhen Intermediate People’s Court.  As the letter of request is directed to a court in the Mainland I agree that it is appropriate that the letter of request is issued in simplified Chinese, although I think it will be helpful if an English version is appended to this decision along with the Chinese version for readers who are not conversant with Chinese.

16.  I will make the following order:

(1)     A letter of request in the form appended hereto in simplified Chinese be issued to the Shenzhen Intermediate People’s Court seeking its assistance in aid of the Company’s liquidation and its liquidators.

(2)     The Liquidators’ costs of this application be paid out of the assets of the Company as an expense of the Company’s liquidation.

___________________________________________________________________

根据认可和协助香港特别行政区破产程序试点方案发出的司法协助请求函

__________________________________________________________________

致：深圳市中级人民法院破产法庭（“深圳市破产法庭”）

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.     森信纸业有限公司（“公司”）是一家于1981年3月24日根据香港法律注册成立的公司。

3.     公司在香港从事纸制品贸易已有40多年。

4.     于2020年8月14日，公司A类股股东通过书面决议，自愿将公司清盘，并委任位于香港金钟道88号太古广场一座35楼德勤.关黄陈方会计师行的黎嘉恩先生和何国梁先生共同和各別担任公司的清盘人（“清盘人”）。因此，公司自2020年8月14日起已在香港进行债权人自愿清盘（“清盘程序”）。

5.     于2020年8月25日，公司债权人通过决议，确认清盘人的委任。

6.     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251条），授权清盘人共同及各別采取（其中包括）以下行动：

(a)   将公司有权享有或看似有权享有的所有财产及据法权产，收归该清盘人保管或控制；

(b)   借公开拍卖或私人合约，出售公司的不动产、动产及据法权产，并有权将该等财产及权产全盘转让予任何人或任何公司，或将它们分拆出售;

(c)   以公司名义和代表公司作出所有作为及签立所有契据、收据及其他文件，并可为该目的而在有需要时，使用公司印章；及

(d)    作出为公司事务清盘及公司资产分配而需要作出的所有其他事情。

7.     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，需要深圳破产法庭认可他们的委任：

(a)    公司在内地的资产包括：

(i)    一家位于深圳的全资附属公司，即森信纸业（深圳）有限公司*，该公司又在南宁和厦门持有两家分公司;

(ii)     一家位于上海的全资附属公司，即能京商贸(上海)有限公司*;

    *仅供识别

(iii)     应收下列在内地注册成立的集团公司的款项（截至2020年    8月14日）合共约4.22亿港元：

Name of company	HKD
Universal Pulp & Paper (Shangdong) Co. Ltd* （远通纸业（山东）有限公司）	208,567,255
Samson Paper (Shenzhen) Company Limited* （森信纸业（深圳）有限公司）	93,015,577
NJ Trading (Shanghai) Company Limited* （能京商贸（上海）有限公司）	60,689,874
Sino Development (Tianjin) International Trading Co. Ltd* （建成（天津）国际贸易有限公司）	32,544,776
SJ (China) Company Limited (Formerly known as Universal Pulp & Paper (Jiangsu) Co. Ltd) * （诚仁（中国）有限公司（前称「远通纸业（江苏）有限公司」））	19,219,773
Shanghai Samson (Culture) Company Ltd* （上海森信文化用品有限公司）	7,799,018

*仅供识别

(iv)   位于北京的一套公寓。

8.     因此，清盘人认为，根据香港法律，向深圳破产法庭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。

9.     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，向深圳破产法庭提出协助请求符合正义。为使清盘人能够履行其职责，谨请深圳破产法庭协助本法庭，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。

10.     本法庭谨请深圳破产法庭为清盘程序及清盘人提供协助，签发命令并指示：

(a)    清盘程序和清盘人的委任均得深圳破产法庭的认可；及

(b)    清盘人拥有并可行使香港法律赋予他们的权力（如上文所载），并可在内地法律允许的最大范围内行使。

11.     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。

12.     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。

13.     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，认可深圳破产法庭的请求函，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）。

 

____________________________________________________________________ 

LETTER OF REQUEST FOR JUDICIAL ASSISTANCE

UNDER THE PILOT MEASURE IN RELATION TO THE RECOGNITION OF AND ASSISTANCE TO INSOLVENCY PROCEEDINGS IN THE HONG KONG SPECIAL ADMINISTRATIVE REGION

_____________________________________________________________________

 

To: Bankruptcy Court of the Shenzhen Intermediate People’s Court (“Shenzhen Bankruptcy 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.     Samson Paper Company Limited (“Company”) is a company incorporated under the laws of Hong Kong on 24 March 1981.

3.     The Company engaged in the trading of paper products in Hong Kong for more than 40 years.

4.     On 14 August 2020, the shareholder of class A shares of the Company passed a written resolution to wind up the Company voluntarily and appointed Mr Lai Kar Yan (Derek) and Mr Ho Kwok Leung Glen of Deloitte Touche Tohmatsu, 35/F, One Pacific Place, 88 Queensway, Hong Kong, as liquidators of the Company jointly and severally (“Liquidators”). Accordingly, the Company has been in creditors’ voluntary liquidation in Hong Kong since 14 August 2020 (“Liquidation Proceedings”).

5.     On 25 August 2020, the creditors of the Company passed a resolution confirming the appointment of the Liquidators.

6.     Under Hong Kong law (including section 251 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32)), the Liquidators are authorised jointly and severally to, among others:

 (a)  take into their custody, or under their control, all the property and things in action to which the Company is or appears to be entitled;

 (b)  sell the real and personal property and things in action of the Company by public auction or private contract, with power to transfer the whole of the property and things in action to any person or company, or to sell them in parcels;

 (c)  do all acts and execute, in the name and on behalf of the Company, all deeds, receipts and other documents, and for that purpose use, when necessary, the Company’s seal; and

 (d)  do all other things as may be necessary for winding up the affairs of the Company and distributing its assets.

7.     The Liquidators consider that the effective exercise of their powers under Hong Kong law requires that their appointment be recognised by the Shenzhen Bankruptcy Court because of, inter alia, the following facts:

 (a)  The Company’s assets in the Mainland include:

(i)  a wholly-owned subsidiary in Shenzhen, namely Samson Paper (Shenzhen) Company Limited* (森信纸业（深圳）有限公司), which in turns holds two wholly-owned branches in Nanning and Xiamen;

(ii)  a wholly-owned subsidiary in Shanghai, namely NJ Trading (Shanghai) Company Limited* (能京商贸（上海）有限公司);

 * for identification purpose only

(iii)  receivables (as of 14 August 2020) in the aggregate sum of approximately HKD422 million due from the following group companies incorporated in the Mainland:

Name of company	HKD
Universal Pulp & Paper (Shangdong) Co. Ltd* （远通纸业（山东）有限公司）	208,567,255
Samson Paper (Shenzhen) Company Limited* （森信纸业（深圳）有限公司）	93,015,577
NJ Trading (Shanghai) Company Limited* （能京商贸（上海）有限公司）	60,689,874
Sino Development (Tianjin) International Trading Co. Ltd* （建成（天津）国际贸易有限公司）	32,544,776
SJ (China) Company Limited (Formerly known as Universal Pulp & Paper (Jiangsu) Co. Ltd) * （诚仁（中国）有限公司（前称「远通纸业（江苏）有限公司」））	19,219,773
Shanghai Samson (Culture) Company Ltd* （上海森信文化用品有限公司）	7,799,018

* for identification purpose only

(iv)  an apartment in Beijing.

8.     Accordingly, the Liquidators consider it appropriate, as a matter of Hong Kong law, to seek relief from the Shenzhen Bankruptcy Court, most specifically and importantly for the recognition of the Liquidators and their powers.

9.     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 Bankruptcy 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.

10.    This Court hereby respectfully requests the Shenzhen Bankruptcy Court to act in aid of the Liquidation Proceedings and in aid of the Liquidators by ordering and directing that:

(a)  the Liquidation Proceedings and the appointment of the Liquidators be recognised by the Shenzhen Bankruptcy Court; and

(b)  the Liquidators have and may exercise such powers as are available to them under Hong Kong law (as set out above), and to the fullest extent permitted by Mainland law.

11.    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.

12.    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.

13.    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 Bankruptcy Court and provide such assistance as may be requested in respect of that letter of request (subject to applicable limitations under Hong Kong law).