RE YANG WANG JIAN

HCCW 88/2019

[2019] HKCFI 1234

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 88 OF 2019

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DECISION

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1.  This is the renewed application on an ex parte on notice basis by the petitioner (“P”) for the appointment of provisional liquidators to Gold Bless International Invest Limited (the “Company”). The application was first made before Deputy Judge R Ismail SC on 18 April 2019. That application was also made on an ex parte on notice basis. Having heard the parties, whilst the learned Deputy Judge had indicated her preliminary view that the application may be granted, she dismissed the application on the basis of material non-disclosure. She however indicated that the dismissal would not preclude P from making a fresh proper application to the Court.

2.  On the late evening of 18 April 2019, P sought to renew his application, having attempted to address the issue of material non-disclosure by his 3^rdaffirmation.  In a letter dated the same from his legal advisers to the Court, which I received as the Duty Judge, P sought a hearing “at any time slot on 22 or 23 April 2019 available to Court.”  Having heard Mr Ho,counsel for P at about 8 pm on 18 April 2019, and noting that (1) no notice of the hearing had been given to the Company, and (2) hearing bundles werestill being put together, I informed Mr Ho that I was not prepared to entertain the application then but would reserve a hearing slot for the application at 11:30 am on 23 April 2019.

3.  The application is now renewed before me.

4.  The Company was incorporated in the BVI.  It has a Hong Kong business address.

5.  At the material time, P is the registered shareholder of 65 of the 100 issued shares of the Company.  The other registered shareholder is Yu Qigang (“Yu”).

6.  From its incorporation till 7 February 2019, P had been the sole director of the Company.  On that date, the BVI Court order that Yu and Chen Hanhong (“Chen”) be appointed as directors of the Company.

7.  The Company was acquired by P and Yu in 2009 as the corporate vehicle to carry out an investment plan between them in relation to the investment in the shares in Green International Holdings Limited (“Listco”),a company listed on the main board of the SEHK.

8.  As things now stand, the Company’s main asset is its 16.76% shareholding in the Listco (“Held Shares”).  It holds those shares through its securities account in Hong Kong maintained with GF Securities (HK) Brokerage Ltd (“GF Securities”).

9.  In about 2017, disputes arose between P and Yu.  Yu commenced HCA 922/2017 against P and claimed that all the 65 shares in the Company registered in his name were in fact held on trust for Yu.

10.  In the course of that action, Yang gave an undertaking (the “Undertaking”) to the Court not to dispose of any of the Held Shares.

11.  There have also been related legal actions in the BVI.

12.  On 19 March 2019, the Listco in an EGM approved a subscription agreement between it and Jumbo Faith International Limited (“Jumbo Faith”).  Jumbo Faith is wholly-owned by Yu’s wife.

13.  As a result of the performance of the subscription agreement on about 3 or 4 April 2019, Jumbo Faith is required pursuant to the Takeovers Code to make a General Offer for all the issued shares in the Listco.

14.  The deadline for acceptance by shareholders of that General Offer is 2 May 2019.

15.  From the Company’s perspective, the General Offer is howeverin reality open for acceptance only until 26 April 2019 because GF Securities will need time to process any acceptance.  That earlier deadline was set by GF Securities.

16.  The alleged concerns were these.  Consideration ought to be given as to whether the Company should accept the General Offer.  However,P is restrained by the Undertaking not to dispose of any of the Held Shares.  Yu has at least potential (if not actual) conflict given his wife’s interest in Jumbo Faith. 

17.  P hence seeks an urgent appointment of provisional liquidators to, he suggests, preserve the Company’s assets.

18.  The Court is grateful to the parties and in particular Mr Sin, who appears for the Official Receiver on short notice, for the assistance he has provided to the Court.  As Mr Sin has submitted, citing Re Legend International Resorts Ltd [2006] 2 HKLRD 192 (CA), that the purpose of the appointment is to protect the company’s assets and the traditional basis that assets are in jeopardy must be made out for the appointment of provisional liquidators.

19.  In the present case, I am of the view that P has failed to discharge that burden, and that this is not an appropriate case for the appointment of provisional liquidators:

 (a) What P is seeking is the appointment of provisional liquidators so that they could consider whether the General Offer should be accepted.  There is no evidence before me as to the effects of accepting or rejecting the General Offer would have on the value of the Company’s assets;

 (b) In particular, there is no evidence before me that if the General Offer is not accepted, the assets of the Company will be jeopardized;

 (c) The financial adviser’s opinion that “There is no guarantee on whether the trading price of the Consolidated Shares could be sustained at a level higher than the Share Offer Price during and after the Offer Period” is in my view insufficient to establish jeopardy, and the fact that the shares of the Listco are illiquid is neither here nor there in this regard;

 (d) I agree with Mr Maurellet SC’s submissions that despite the Undertaking, P could and should have taken a stance and supported his stance with evidence, so that if the evidence suggests that the General Offer should be accepted, amandatory injunction may be sought, or if the evidence suggests the contrary, a prohibitory injunction may be applied for;

 (e) I note in this regard, as highlighted by Mr Maurellet, that the alleged debts owed by the Company to P accounted only for about 25% of the overall liabilities of the Company.  Other creditors have not joined in for the present application;

 (f) The appointment of provisional liquidators with the full usual powers (which carries with it substantial costs) is in my view a misfit in the circumstances of this case.

20.  I also take into account the following matters when refusing in the exercise of my discretion to grant the application:

 (a) There has been a delay of about 14 days from the time when P first raised the matter with the Company and the time when the application was first made, with no chaser from P to the Company in between.

 (b) There is further, as has been pointed out by Mr Maurellet, no evidence that P is good for his undertaking for damages.

21.  In the circumstances, I dismiss the application.  I will hear parties on costs.